297 10 3494 https://omeka.ibu.edu.ba/files/original/2714c8c9acbd99ce7429aae01f84bd5b.pdf 2e1af8003dd9929120ef752f6df24450 PDF Text Text 2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Global Financial Crisis: Economic Austerity Measures Of Turkey Merve KILIÇ Fatih University, Turkey mervekilic@fatih.edu.tr Abstract: The global financial crisis has been the worst financial crisis since the one related to the Great Depression of the 1930s. It contributed to widespread business contraction, increases in unemployment, shrinking government revenues, declines in consumer wealth, and so a significant decline in economic activity. Many causes have been cited about the global financial crisis by leading economists and experts. Both market-based and regulatory solutions have been presented to lessen the dramatic effects of the crisis. The collapse of a housing bubble, which peaked in the United States in 2006, erupted in 2007 and led to a global financial crisis in 2008. This crisis has been triggered by a dramatic rise in mortgage delinquencies and foreclosures in the U.S. and has caused the values of securities tied to housing prices. So it has damaged financial institutions all over the world. The financial crisis which began in industrialized countries quickly spread to emerging and developing economies. Questions about bank liquidity, declines in credit availability, and damaged investor confidence had a negative impact on global markets, and caused large losses during 2008. This global crisis also affected Turkey. But the effects of this crisis on Turkey were limited. Demand in global and national markets has decreased. So the trade level in both national and global markets has also decreased. Bank‘s liquidity and profitability seemed healthy during such a crucial crisis. There were several policies of Turkish Government to diminish the effects of financial crisis about interest rates, tax rates, exports rediscount credit limit etc. This study aims to analyze the effects of the global financial crisis and the measures taken by Turkey to lessen the negative effects of it on Turkish economy. Introduction A first glance at Turkey‘s performance in the current global financial crisis shows that it has managed to weather the global stormy conditions relatively well. Although Turkey has been negatively affected by this crisis, it has succeeded to avoid collapsing into a currency and financial crisis. Activity in the real sector has contracted sharply, mainly as a result of both collapsing external demand and strongly declining domestic demand. A financial crisis similar to those in the 1990s and in 2000/2001 has been avoided before. Experiences of Turkey from those previous crises have conserved it from the last global financial crisis. However there are still negative signals in the economy that have occurred because of old vulnerabilities of the Turkish economy. Warning indications that the Turkish economy include developments related to the timing of the economic slowdown, the fairly large correction of the exchange rate at the beginning of the crisis, concerns regarding the external indebtedness of the private sector and the numerous voices calling for policy anchors, such as the introduction of binding fiscal rules or a new IMF arrangement (Macovei, 2009). This global financial has affected not only U.S., but also all the countries in the world. 2008-2009 financial crisis was the deepest one since 1929 Great Depression. Governments have taken several measures to decrease the effects of this crisis in their countries. Turkish Government also has taken several measures toward global financial crisis. Although Turkey experienced crises before, this last one was different from others. 1990s and 2000/2001 crises of Turkey were triggered by domestic instability rather than international factors. The main purpose of this paper is to analyze the economic austerity measures of Turkey to lessen the affects of the global financial crisis. In this paper general causes and the consequences of the crisis will be also assessed. The market collapse which started in U.S. now dispersed all over the countries and affected the world economy. As a developing country, Turkey, has applied several policies. Those policies should be some different than Turkey applied in prior crisis, because the causes of the last one was so different. The paper is organized as follows. The second section analyzes the causes and consequences of the Global Financial Crisis which has occurred in the U.S. The third part explains the effects of this crisis on Turkish Economy. 712 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo The economic austerity measures which have been taken by Turkish Government have been explained in the fourth section. The last section gives the conclusions of this study. Causes and Consequences of the 2008-2009 Global Financial Crises The turmoil in the U.S. subprime mortgage market, which erupted in the second half of 2007, started to spillover to the overall markets challenging both financial and economic stability. There are mainly two reasons underlying the widespread and devastating effects of this crisis. The first one of these is globalization phenomenon that has gained pace early 1980s reaching peak 2000s. Globalization led to financial and economic systems to be highly integrated. The second one is that this is a financial crisis and that erupted in many developed economies simultaneously (www.tcmb.gov.tr). There were other reasons that had triggered the global financial crisis underlying those two main reasons. The first one was the bursting of the housing bubble. Falling house prices have a major effect on household wealth, spending and defaults on loans held by institutions. Events in the U.S. typify a global phenomenon. From 2000 to 2006, house prices in some areas doubled and then subsequently collapsed. While house prices were rising so strongly, credit was supplied liberally to meet the demand as perceptions of risk fell. The rising wealth boosted confidence and spending (Mckibbin and Stockel, 2009). Low interest rates and large inflows of foreign funds created easy credit conditions and encouraged debt-financed consumption. Easy credit, and a belief that house prices would continue to appreciate, had encouraged many subprime borrowers to obtain adjustable-rate mortgages. This credit and house price explosion caused a building boom and a surplus of unsold homes. As the number of unsold houses increased, the U.S. houses prices begin declining in mid-2006. The decline in mortgage payments also reduced the value of mortgage-backed securities, which eroded the net worth and financial health of banks. This vicious cycle was at the heart of the crisis (www.wikipedia.org). The second reason, even though the U.S. had low and sometimes negative savings rates, there was a ―global savings glut‖ coming from the savings of China, Japan, the Middle East, and Europe. It is widely believed that one of the driving forces of over lending and reckless investment in the U.S. housing market came from the global imbalance in savings and investment. The Asian financial crisis occurred in 1997 after some Asian nations suffered seriously from slumping exchange rates because of a lack of foreign reserve. Many of the emerging countries started to save their money in foreign reserves, particularly U.S. dollars. This global saving mainly from China, Japan, Russia, Taiwan, India, Brazil and other oil-exporting countries, was used to buy U.S. Treasury bonds and other U.S. securities. The global imbalance reflected the chronic shortage of savings relative to investment in the U.S. and other developed countries, but the substantial savings surplus to investment in emerging countries (Yu et al., 2009). The third cause was the creative financial intermediation made possible by innovative, but complex, mortgage securities. These securities were sold globally under a lax financial regulatory system with the promise of stable and generous long-term returns (Yu et al., 2009). Along with the rise of unregulated lenders came a rise in the kinds of subprime loans that economists say have sounded an alarm. The large number of adjustable rate mortgages, interest-only mortgages and ―stated income‖ loans are an example of this thinking. ―Stated income‖ loans, also called ―no doc‖ loans and, sarcastically, ―liar loans,‖ are a subset of Alt-A loans. The borrower does not have to provide documentation to substantiate the income stated on the application to finance home purchases. Such loans should have raised concerns about the quality of the loans if interest rates increased or the borrower became unable to pay the mortgage (Bianco, 2008). The causes of global financial crisis are summarized in G-20 Financial Markets and World Economy Conference Declaration. These developments, together, contributed to excesses and ultimately resulted in severe market disruption: During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions. Major underlying factors to the current situation were, among others, inconsistent and insufficiently coordinated macroeconomic policies, inadequate structural reforms, which led to unsustainable global macroeconomic outcomes. There are long-term and short-term consequences of this global financial crisis. Slower global growth was one of the dramatic results of the crisis. Global growth stood at 5 percent in 2007, but IMF expects world growth to 713 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo slow to 3 percent in 2009. Some countries experienced economic contraction after the crisis. In G7 countries except for the United States and Canada, GDP growth was slower in Q2 of 2008 compared to Q1. Three major European economies (Italy, France and Germany) experienced negative GDP growth in Q2, and forecasts are for a continued decline in Q3. The IMF forecasts around 0 percent growth for advanced economies in 2009, and the Federal Reserve Bank of San Francisco said that the U.S. economy will face a sharp slowdown in the final quarter of 2008 and a small contraction in the first quarter of 2009. The crisis caused financing challenges for governments. There is some risk that governments may not be able to guarantee the stability of the financial system, as it has become clear in the case of Iceland, where the banking sector has assets of around 300% of GDP, something no government could ever guarantee, at least not on a short-term basis. Other crucial consequence of the crisis was the rising unemployment. The IMF also predicts that unemployment in the advanced economies will rise from 5.7 percent in 2008 to 6.5 percent in 2009. As economic growth slows, some sectors, including construction and real estate services, are likely to experience disproportionate employment declines. Significant job losses in the financial sector of the industrialized nations are also likely. Since its employment peak in December 2006, the U.S. financial industry has lost 172,000 jobs. In September 2008 alone, the U.S. lost 17,000 financial jobs, representing 10.6% of total employment losses that month. The financial sector employment in Europe exhibits similar downward trends. Another result was the decreasing trade volume. According to the IMF, the forecast for world trade volume growth (in terms of goods and services) has been revised downwards by 1.9 percentage points to reach 4.1% in 2009, with a likely impact on labor markets in developing and emerging economies. A drop in exports, as well as capital inflow, may trigger a falloff in investments. Deceleration of growth and deteriorating financing conditions may trigger further business failures and possibly more banking emergencies – the result being that some countries may slip toward a balance of payment crisis (Khatiwada and McGirr, 2009). The Effects of the Global Financial Crisis on Turkish Economy Turkish economy has high level of integration with world economy through trade and financing channels. So the contagion of the Turkish economy from the crisis is related with this integration. The problems in global credit markets have led to loss of consumer confidence, domestic uncertainties and deterioration in risk perceptions, and so decline in international trade. So, the impact has come mainly through two channels: the collapse in external demand has affected Turkey‘s key exports while subdued domestic lending and capital inflows have depressed domestic demand (Macovei, 2009). The effects of the crisis have been significantly felt after the second quarter of the 2008 when economic growth rate started to decline in Turkey. As a result, Turkish economy grew by only 0.9 percent in 2008, while the growth rate was 4.7 percent in 2007. As the global uncertainties intensified at the beginning of 2009, the slowdown of the economy deepened. The GDP contracted by 14.3 percent in the first quarter of 2009. However, with positive effects of fiscal stimulus packages the slowdown of the economy moderated in the second quarter. As a result, Turkish economy contracted by 10.6 in the first half of 2009. The unemployment rate, which was 10.3 percent in September 2008, increased to 16.1 percent in February 2009. Partly due to the effect of the tax reductions implemented in certain sectors, the unemployment rate began to fall and realized at 13 percent in June 2009. Consumer inflation declined to 5.3 percent as of August 2009. It is expected to be around 5 percent at the end of the year. The Central Bank short-term interest rates decreased to 7.25 percent, down by 10.5 percentage points compared with the last quarter of 2008. Market interest rates also decreased in line with the interest rate policy of the Central Bank (www.tbb.org.tr). Both external and internal demand decreased, and so output and income declined. External financing became limited. The unemployment rate increased. On the other hand, interest and inflation rates have decreased (Tab. 1). GDP (YTL/TL) Real GDP Growth Inflation Unemployment Rate The Central Bank Short-Term Interest Rates Dec.2002 275.032 6.2 29.7 10.3 Dec.2003 356.680 5.3 18.4 10.5 Dec.2004 430.511 9.4 9.3 10.3 Dec.2005 486.401 8.4 7.7 10.3 Dec.2006 575.784 6.89 9.7 8.8 Dec. 2007 856.387 4.67 8.4 10.6 Dec. 2008 950.144 -1.1 10.1 13.6 Nov. 2009 700.958 -6.5 6.53 13.0 44 26 18.0 13.5 17.5 15.75 15.0 6.5 Table 1: Selected Economic Variables (percentage) Source: TURKSTAT 714 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Foreign direct investment came into Turkey has also adversely been affected by this crisis. The liquidity crunch which has been triggered by the crisis eventually led to a downward trend in foreign direct investments. According to UNCTAD (United Nations Conference on Trade and Development), FDI inflows declined by 15 percent according to preliminary figures of 2008. According to UNCTAD data, investment inflows into developed countries dropped 32.7 percent, while inflows into developing countries increased by 3.6 percent. In the first ten months of 2009, FDI inflows to Turkey have reached to 6.622 billion USD. In parallel to the decline in global FDI inflows in 2008, FDI inflows declined by 18 percent in Turkey and received a total of 18 billion USD. The decline in FDI inflows to Turkey are reflecting the global downward trend (Fig. 1). Figure 1: FDI (Foreign Direct Inflows) to Turkey (2002-2009) Source: www.treasury.gov.tr The effects of the crisis on Turkish economy can be classified as effects on real economy, effects on financial markets, and effects on banking sector. The Impact on Real Economy Global financial economic crisis has a significant negative impact on the real economy of Turkey. The negative effects of the global crisis on Turkey‘s real economy have become highly evident in the last quarter of 2008 and in the first quarter 2009. The real sector has been impacted through two main channels: external demand has shrunk significantly since October 2008, and domestic demand has contracted in tandem with deteriorating business prospects and lending conditions (Macovei, 2009). The index of industrial production has declined sharply since August 2008. Industrial capacity in this global financial crisis has decreased more than it decreased in 2001 financial crisis. Manufacturing industry is an important part of Turkish economy. It creates employment and export opportunities. More specifically, about 4.5 million work force is employed and about 95% export of export generated in the manufacturing industry. Due to the economic crisis, the manufacturing production declined (Çiçek and Hatırlı, 2009). Several industries, in particular car industry, were highly sensitive to a drop in external demand, mainly that originating from the European Union countries. Annual decline in the automotive sector doubled the rate recorded in the 2001 crisis. In the 2001 crisis, the lowest level attained by the drop in the capacity utilization rate was 68.5% in April 2001, whereas in the current crisis, the capacity utilization rate sank to 63.8% in both January and February 2009 in the automotive industry. Production in the automotive sector contracted on average by almost 30% annually in the second half of 2009 (Tab. 2). The machinery and textiles sectors are also contracted by around 24% and 20%, respectively in 2008 (Tab. 3 and Tab. 4). 715 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo 2004 2005 2006 2007 2008 2008 (11 months) 2009 (11 months) Change (%) 20082009 Production (Thousand) Export (Thousand) 864 916 1.026 1.133 1.147 1.108 775 -30 519 561 706 830 910 873 560 -35 Exp./Production (%) 60 61 69 73 79 79 72 - Table 2: Production and Export of Automotive Industry Source: OSD Dec.2006 107.8 107.7 100.1 113.8 110.0 Dec. 2007 115.3 114.8 102.9 120.9 126.7 Dec. 2008 114.3 112.7 91.4 115 133.9 Oct. 2009 117.9 116.7 93.2 114.2 109 Total Industry Manufacturing Textile Machinery Transportation Equipment Table 3: Industrial Production Indexes (2005=100.0) Dec.2006 Dec. 2007 -1.9 -2.6 -10.9 -16 13.6 Dec. 2008 -17.8 -20.1 -22.0 -14.8 -40.0 Oct. 2009 6.5 6.6 4.9 9.4 -4.6 Total Industry 2.6 Manufacturing 1.6 -5.0 Textile 17.8 Machinery Transportation 10.0 Equipment Table 4: Percentage Change of Monthly Industrial Production Index over to the Same Month of the Previous Year (2005=100.0) Source: TURKSTAT World trade contracted 9.8 percent in the last quarter of 2008 and 31.9 percent in the first half of 2009 (Fig. 2). The annual volume of external trade was USD 348 billion as of September 2008 and dropped to USD 258 billion as of June 2009. Decline in exports has been significant in the current crisis whereas in the previous one they were less affected. This result is as expected. Because in the last crisis the whole world is in recession. Figure 2: Export levels of the World and Turkey Source: http://www.istanbul2009turkey.org/istanbul2009/Turkey/Turkish%20Economy.pdf Together with the weakening in oil and commodity prices and decline in exports of technology intensive sectors with higher dependency, imports has also been declining since October 2008 (Fig. 3). 716 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Figure 3: Exports and Imports Source: http://www.istanbul2009turkey.org/istanbul2009/Turkey/Turkish%20Economy.pdf Export (YTL/TL) Import (YTL/TL) Dec.2002 54.622 78.390 Dec.2003 70.370 103.425 Dec.2004 90.327 139.677 Dec.2005 99.039 157.381 Dec.2006 123.342 201.078 Dec. 2007 139.340 221.029 Dec. 2008 170.513 258.691 Nov. 2009 130.143 175.654 Table 5: Exports and Import of Turkey Source: TURKSTAT As a result, world trade volume and global economic activity has weakened substantially because of the global financial turmoil especially since the third quarter of 2008. Parallel to this development, Turkey‘s exports has been declining since October 2008 due to the significant slowdown in her major trading partners, especially in the European Union (EU). The increase in trade volume with African nations turned out to be a factor that restricted the further fall in exports (www.istanbul2009turkey.org). The Impact on Financial Markets The Turkish currency and financial markets came under significant pressure from the turmoil in global markets that broke out in July 2007 and subsequent decline in risk appetite for emerging market investments. The Istanbul Stock Exchange lost about 55% of its value from July 2007 until March 2009, when a rebound started. Between March and June 2009, the stock exchange regained some ground, but remained around 30% below the July 2007 value (Fig. 4). Figure 4: Price Indices ISE National-100, According to Closing Price Source: www.tcmb.gov.tr 717 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Turkish Lira has been in a strengthening period after 2002. The Lira became more volatile during the subprime credit crunch, but did not depreciate strongly until October-November 2008- after Lehman Brothers collapsed. So, international financial crisis put upward pressure on the exchange rate and TL depreciated. From October 2008 until March 2009, the lira lost around 25% of its value against Euro, but has since regained about 10% (Macvoeli, 2009). The Lira also lost about 20% of its value against US Dollar from September 2008 to June 2009. The Impact on Banking Sector In Turkey, the financial sector is yet at the stage of growth. It is small and shallow when compared with the financial sectors of developed countries. It is estimated that the ratio of financial assets, consisting of bank assets, shares and public and private borrowing instruments, to GDP was 150 percent for Turkey, 246 percent for developing countries and 421 percent for the world in 2007. The banking system has a major share in the financial sector (www.tbb.org.tr). After the 2001 financial crisis, a restructuring program was applied in the banking sector. Bankrupt banks were closed, taken over or merged with other banks after the 2001 crisis. Risk management systems improved and public supervision became more effective in this period. Banking Regulation and Supervision Agency fulfilled its regulation and supervision responsibilities very well in 2000s. The banking sector has showed a rapid growth performance after this program. The total assets rose from USD 130 billion to USD 465 billion, their ratio to GDP from 57 percent to 77 percent. In this period, the financial structure of the sector also became stronger. The shareholders‘ equity of the sector also became stronger. The shareholders‘ equity of the sector increased from USD 16 billion to USD 54 billion and its free equity from USD 3 billion to USD 40 billion (www.tbb.org.tr). As a result of success of ―Banking Restructuring Program‖ and change in the risk management conception Turkish Banking Sector seemed well positioned to weather the global financial crisis, the opposite of the situation in the EU and the US where the crisis was first triggered by the financial turmoil. Financial sector as a whole and banking sector grew faster than the general economy in 2008. Total assets of Turkish financial sector and banking sector grew 23% and 26%, respectively. Total assets of Turkish financial sector and banking sector reached to 945.4 billion Turkish Liras (TL) in 2008 (Bastı, 2009). Performance indicators of the banking sector were also generally positive in 2008. Capital adequacy ratio of the sector is above the legal limits. There is small deterioration in solvency and leverage ratios, but debt repayment capacity of the banking sector seems still healthy. Profitability of the banking sector is still very high by the end of 2008 (Bastı, 2009). The Economic Austerity Measures of Turkey against the Global Financial Crisis The authorities and organizations adopted a series of measures to lessen the effects of the global financial crisis on their own countries, and also in Turkey. Those anti-crisis measures adopted by the authorities initially on the monetary side and subsequently became more pronounced in the fiscal policy area. This was broadly in line with the crisis response packages adopted internationally, while taking into account the particularities of Turkey‘s macroeconomic framework in terms of available room for counter-cyclical measures. The Central Bank, Banking Regulation and Supervision Agency, and Turkish Government have taken some austerity measures against global financial crisis to protect Turkey from the negative effects of the global financial crisis. Central Bank Measures against the Global Financial Crisis Problems in the international credit markets have heightened since the second half of September due to increased concerns over the credibility of the financial system, thus leading to liquidity problems in many countries. During this period, the Central Bank adopted the following regulations in order to ensure the efficient functioning of the foreign exchange market and to strengthen foreign exchange liquidity in the banking system in case of liquidity problems (www.tcmb.gov.tr ): Central Bank declared that it will resume its activities as an intermediary in the Foreign Exchange Deposit Market until the removal of uncertainties in international markets since 9 October 2008. Central Bank increased its transaction limits in the Foreign Exchange Deposit Market by twofold to USD 10.8 billion since 23October 2008. Central Bank extended lending maturity to one month from one week in the Foreign Exchange Deposit Market since 21 November 2008. It adopted a strategy to use foreign exchange reserves to primarily support the foreign exchange liquidity need of the banking system. The reserve requirement ratio was unchanged at 6 percent in liabilities, but it was lowered to 9 percent from 11 percent in foreign exchange liabilities 718 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo since 28 November 2008. With this measure, the Central Bank provided an additional liquidity of USD 2.5 billion to the banking system. The Central Bank Regulation on the Liquidity Support Facility governing the principles and procedures set forth for the utilization of credit facilities as stipulated in subparagraph (c) of the (I) of Article 40 of the Central Bank Law was published. Accordingly, the loans will be available (www.tbb.org.tr):  as advance payments, with one month maturities for a maximum of one year period,  at the lending rate set for the intraday transactions carried out at the Interbank Money Market; bearing in mind the principle that interest rates applicable to credits of this nature are higher than those applicable to normal open market transactions of the central banks,  against collaterals accepted at the Interbank Money Market,  being limited to the amount twice as much as the equity capital of the applying bank. In the last quarter of 2008, global financial conditions have been tighter than required by the stance of monetary policy, owing mainly to the intensification of the global financial crisis. Turkey has also been undergoing a similar process. In this context, the Central Bank recently made a measured cut in short-term interest rates, in order to offset the extra tightening in monetary conditions (www.tcmb.gov.tr). Because of the fluctuations due to decrease in the depth of foreign exchange market, the Central Bank has decided to inject foreign exchange liquidity into the market in March 10, 2009 through pre-announced foreign exchange selling auctions under the basic principles of floating exchange rate regime. Daily amount of foreign exchange to be sold via auctions has been set as USD 50 million. Until April 2009, when the auctions were postponed, the amount sold through auctions reached USD 900 million. The Central Bank has started foreign exchange buying auctions in order to increase foreign exchange reserves and the amount bought through the auctions reached to 1.3 billion dollar as of September 15 2009 (www.istanbul2009turkey.org). The Central Bank cut its interest rates and extended the maturity in foreign exchange deposit market in order to prevent a possible foreign exchange squeeze in the financial market. Accordingly, lending rate was reduced to 5.5 percent from 7.0 percent for USD, and to 6.5 percent from 9.0 percent for Euro. The maturity of interbank transactions was extended to 3 months from 1 month (www.tbb.org.tr). Central Bank increased the exports rediscount credit limit by USD 500 million to USD 1 billion in order to contain the effects of the global financial crisis on industry sectors. Additionally, the rules and principles applicable to the exports rediscount loan limit were rearranged for rendering the use of these loans easier. Therefore, the condition that sets forth assignment of the reserves for letters of credit to the Central Bank was repealed (Erdönmez, 2009). The Banking Regulation and Supervision (BRSA) Measures against the Global Financial Crisis The Banking Regulation and Supervision (BRSA) adopted certain measures aimed at preserving the financial strength of banks and containing the effects of abrupt changes in the financial asset prices on banks‘ capital adequacies. BRSA required banks to get permission for distribution of the 2008 earnings and to protect the balance sheets of the banks from the last interest rate increase BRSA made a new arrangement. BRSA allowed banks to reclassify the securities in their balance sheet from trading portfolio to investment portfolio for once only. BRSA allowed banks to restructure the loans apparently posing no problems in order to ensure smooth functioning of the loan relations between banks and non-financial institutions (www.tbb.org.tr). The Government Measures against the Global Financial Crisis To mitigate the adverse effects of global financial crisis on the Turkish Economy the Government has taken various measures. Credit subsidies have been provided to the real sector with special focus on small and medium enterprises and also exporters, guarantee and credit limits of Eximbank were increased, value added tax and special consumption tax on many products such as automobile, furniture, home appliances and residential estates were reduced temporarily, withholding tax on stocks for local investors was removed, the amount of short-term working allowance was increased and its duration was lengthened, unemployment insurance payments were amplified, infrastructure expenditures to the Southeastern Anatolia Project were increased, transfer payments to local governments were increased, incentives on income tax, energy supports, and social security premiums were extended for one year, a new employment package was prepared, a new incentive system was prepared to support investments taking sectoral and regional priorities into consideration, loan guarantee application for small and medium enterprises (SMEs) were enhanced, regulations for reconstructing cumulative credit card debts were put into practice (www.treasury.gov.tr). 719 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo The Government sought authorization from the Parliament for increasing and determining for a period of two years the deposit insurance coverage, which was TL 50,000. This amendment allowed for the Treasury‘s direct guarantee on the deposits insured as the Savings Deposit Insurance Fund‘s (SDIF) own resources would not be sufficient to cover an unlimited insurance on deposits for which the SDIF was authorized under the current law. Additionally, the Finance Ministry introduced tax advantages for sectors. Accordingly, payment of the tax dues which became payable before 1 September 2008 was decided to be deferred to December 2008 and with 18 installments (www.tbb.org.tr). With a law, called Asset Peace Law, the real and legal person owing money, foreign exchange, stocks and other precious assets abroad as of 1 October 2008 allowed to bring them and register those precious assets in Turkey by paying two percent tax. Similarly, it was also decided that current income and corporate taxpayers should be able to register their existing securities and real properties inside Turkey which were not registered as of 1 October 2008 through payment of five percent tax (Erdönmez, 2009). ―The Law No. 5834 About Omission of the Past Records for Unpaid Checks and Protested Promissory Notes, and Credit and Credit Card Debts‖, known as the law for the amnesty records allowed the deletion of the real and legal persons‘ past records kept at the Central Bank for their unpaid checks, protested promissory notes, and credit debts ensuring that such sums are totally paid before or within 6 months after its effective date or restructured and totally paid. The Government introduced a new economic austerity package for companies, employees, and retired people as a law. With this law, the short term employment fund implemented over Unemployment Fund was extended to 6 months from 3 months. The amount of compensation was increased by 50 percent. According to this law the retirement wages could never be seized (Erdönmez, 2009). The Government also announced other measures in order to ease the effects of the global financial crisis on 13 March 2009. Accordingly, it was adopted that (www.tbb.org.tr):  consumption tax applied to durable goods and automobiles to be lowered for a period of 3 months,  value added tax (VAT) applied to real estates to be lowered to 8 percent from 18 percent for a period of 3 months,  an additional subsidy of TL 75 million to be extended to SMEs,  resource utilization support fund to be cut by 5 percentage points,  capital of Eximbank to be increased,  discounted night tariff for pricing the use off electricity in industry sector that applied to weekdays only to be extended to cover also weekends and other public holidays,  Special Communication Tax of cable, wireless, and mobile internet service is decreased from 15 percent to 5 percent,  For 1979 and old model of automobiles which will be written off remission of tax is enabled,  To encourage the merger of SMEs the Government adopted a tax measure. SMEs which merge with other SMEs until 31 December 2009 will be exempted from corporate tax or pay reduced corporate tax down to 7.5%.  To accelerate domestic demand the Government extended the Private Consumption Tax from 15 June 2009 to 30 September 2009. Conclusion The world faced a serious crisis for the first time after the ―Great Depression‖ which started in U.S. and has spread all over the countries in a short time. Turkey has also been affected by this crisis. Foreign direct investment inflows, export, domestic demand, and industrial production have declined, while the unemployment rate and inflation rate have increased. Foreign exchange rate has been also affected dramatically. Lira has lost value against Euro and US Dollar. To mitigate those adverse effects of global financial crisis on the Turkish Economy, the Government, the Central Bank, and Banking Regulation and Supervision Agency have taken various measures. Some of the measures taken in order to cushion negative impacts of global crisis to the national economy have been successful, some of them expected to be effective in the forthcoming periods. A pick up in Turkish economy is expected parallel to the recovery of the world economy. In fact, the economical figures show that Turkey is more resilient to both domestic and external shocks than her previous crisis experiences. The pressures on the exchange rate have not affected banking sector and currency so much. The banking sector has remained healthy and profitable; despite the main source of the global financial crisis was financial sector. Foreign direct investment has declined but continued to flow into the country at moderate levels. Istanbul Stock Exchange has lost value, after a while it has started to regain its value. It can be concluded that the performance of Turkish economy under such a serious crisis validates the success of Turkey‘s past restructurings. 720 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo On the other side, the dramatic rise in unemployment rate and the sharper than expected decline in economic activity show that there are still some vulnerabilities of Turkish economy. According to many analysts the negative effects of the current crisis will remain awhile because of the weak external environment, low levels of external and domestic demand, and shrinkage of the foreign capital inflows. The recession has stroked the bottom in the first quarter of 2009. In the rest of the year the economy has started to rally by force of tax incentives which have provided increase in domestic demand. At this juncture, policymakers should aim to sustain the improvement in investor confidence and to decrease the unemployment rate. Structural reforms boosting the small and medium enterprises (SMEs) and so the competitiveness of the business sector would help improve the performance of the economy in the upturn. As for the Turkish economy‘s future prospects, the increase in GDP between 2002 and 2007 shows that Turkey has an apparent growth potential. With her growth potential, young population, diverse and qualified workforce, entrepreneurial spirit, Turkey is a crucial potential market for global investors. Its strategic location between Europe and Asia give her an important role in this area and makes it a relatively attractive business location. The last developments demonstrate that some of the problems of Turkish economy have been solved, but there are still remaining problems which are waiting to be solved. So, Turkey has to continue to make restructurings and reforms to achieve its expected growth potential. References Ataman Erdönmez, P. (2009). Küresel kriz ve ülkeler tarafından alınan önlemler kronolojisi. Bankacılar Dergisi, 68, 85-101. Bastı, E. (2009). 2008 Global financial crisis and the Turkish financial system. C.U. Sosyal Bilimler Enstitüsü Dergisi, 18 (2), 89103. Bianco, K. M. (2008). The subprime lending crisis: Causes and effects of the mortgage meltdown. CCH Mortgage Compliance Guide and Bank Digest, 10 Dec 2009. < http://business.cch.com/bankingfinance/focus/news/Subprime_WP_rev.pdf >. Khatiwada, S., & Emily, M. (2009). Current financial crisis: A review of some of the consequences, policy actions, and recent trends. International Institute for Labour Studies, 02 Dec 2009. < http://www.scribd.com/doc/7882284/Current-Financial-Crisis-aReview-of-Some-of- >. Macovei, M. (2009). Growth and economic crises in Turkey: Leaving behind a turbulent past?. European Economy, 1 Dec 2009. < http://ec.europa.eu/economy_finance/publications/publication16004_en.pdf >. McKibbin, W. J., & Andrew S. (2009). The global financial crisis: Causes and consequences. Working Papers in International Economics, 05 Dec 2009. <http://www.melbourneinstitute.com/conf2009/Presentations/Session%205/McKibbin_Stoeckel_Session_5.pdf >. Uğur, Ç., & Hatırlı S. A. (2009). Küresel ekonomik krizin Türkiye imalat sanayine etkileri. Suleyman Demirel University, 15 Dec 2009. < http://idc.sdu.edu.tr/tammetinler/kalkinma/kalkinma35.pdf >. Yu, W. C., David, W. K., & Tessema, M. (2009). The great destruction: Causes of the global financial crisis in 2008. Winona State University, 1Dec 2009. < http://course1.winona.edu/wyu/research/p13.pdf >. UNCTAD. (2009). Assessing the impact of the current financial and economic crisis on global FDI flows. 01 Dec 2009. <http://www.unctad.org/en/docs/webdiaeia20091_en.pdf >. Wikipedia. (2009). Subprime mortgage crisis, 10 Nov 2009. <http://en.wikipedia.org/wiki/Subprime_mortgage_crisis>. G20 Declaration. (2008). Summit on financial markets and world economy. 15 Nov 2009. <http://www.bond.org.uk/data/files/g20_declaration_15_nov_summit.pdf >. The Banks Association of Turkey. (2009). The Financial System and Banking Sector in Turkey. 1 Dec 2009.<http://www.tbb.org.tr/Dosyalar/Arastirma_ve_Raporlar/The_Financial_System_and_Banking_Sector_in_Turkey.pdf >. Istanbul2009Turkey. Turkish economy. 10 Dec 2009. <http://www.istanbul2009turkey.org/istanbul2009/Turkey/Turkish%20Economy.pdf >. 721 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo TCMB. (2008). 2009 Yılında para ve kur politikası. Nov 2009. <http://www.tcmb.gov.tr/yeni/duyuru/2008/Baskan_ParaPol09.pdf>. www.osd.org.tr www.tbb.org.tr www.treasury.gov.tr www.turkstat.gov.tr www.tcmb.gov.tr www.unctad.org 722 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 215 Title A name given to the resource Global Financial Crisis: Economic Austerity Measures Of Turkey Author Author KILIÇ, Merve Abstract A summary of the resource. The global financial crisis has been the worst financial crisis since the one related to the Great Depression of the 1930s. It contributed to widespread business contraction, increases in unemployment, shrinking government revenues, declines in consumer wealth, and so a significant decline in economic activity. Many causes have been cited about the global financial crisis by leading economists and experts. Both market-based and regulatory solutions have been presented to lessen the dramatic effects of the crisis. The collapse of a housing bubble, which peaked in the United States in 2006, erupted in 2007 and led to a global financial crisis in 2008. This crisis has been triggered by a dramatic rise in mortgage delinquencies and foreclosures in the U.S. and has caused the values of securities tied to housing prices. So it has damaged financial institutions all over the world. The financial crisis which began in industrialized countries quickly spread to emerging and developing economies. Questions about bank liquidity, declines in credit availability, and damaged investor confidence had a negative impact on global markets, and caused large losses during 2008. This global crisis also affected Turkey. But the effects of this crisis on Turkey were limited. Demand in global and national markets has decreased. So the trade level in both national and global markets has also decreased. Bank‘s liquidity and profitability seemed healthy during such a crucial crisis. There were several policies of Turkish Government to diminish the effects of financial crisis about interest rates, tax rates, exports rediscount credit limit etc. This study aims to analyze the effects of the global financial crisis and the measures taken by Turkey to lessen the negative effects of it on Turkish economy. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/b6e1a3b588ed26607b2cac97be3cbd3d.pdf 5dfe92a1c7b4b97221eae0d8b3f3293d PDF Text Text 2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo The Global Financial Crisis Of 2008 And Turkey Ramazan KILIÇ Assoc. Prof., Dumlupinar University Faculty of Economics and Administrative Sciences Department of Economy, Kütahya/TURKEY rkilic@dumlipinar.edu.tr, ramazank43@hotmail.com Abstract: The First World Economic Crisis that started in 1929 and rapidly influenced all the countries around the world resulted in stagnation, common unemployment, increase in foreign trade deficits and consequent decrease in the level of welfare. The policies initiated in order to decrease and eventually delete these effects of the crisis could only give results many years later. However, erasing the effects of the first crisis was not enough to put an end to the world crises. In 1970 a new crisis bringing along worse results than the previous, began. During this period of both inflation and stagnation, the results have been more destructive. The third major crisis that affected the world economy deeply is, of course, the Global Financial Crisis of 2008. This crisis has affected all the countries around the world and its effects are still visible. In this respect, the Turkish Economy was also influenced by this crisis. In this paper, firstly, economic crises were analyzed, and then the global crises were evaluated from the perspective of Turkey. Introduction After the First World Economic Crisis that emerged in 1929, a new crisis harsher than this one emerged. The third important crisis that deeply affected world economy is the 2008 Global Financial Crisis. Economy of Turkey was affected not only by global crises but also by peculiar structural problems and crises which emerged on regional level. Definition of Globalization and Its Development The concept of globalization is one which has been intensely used beginning from theaftermath of 1980s. Though there are many definitions for globalization, there is no concept which was agreed upon so far. The concept of globalization is a multidimensional and a difficult to restrict issue. The most important reason for this is that globalization is a process which is not merely economical. There are also social, political, and cultural aspects of globalization. Sociologists such as Anthony Giddens and John Tomlinson, by referring to its multi-respect characteristics, appreciate it as a multidimensional procedure with economical, social, cultural and technological aspects. (Rugman, 2000, p.23) Global Financial Crises Crises which deeply affected world economy are 1 st World Economic Crisis of 1929, Oil Crisis of 1970 and Financial Crisis of 2008. Crisis of 1929 In world economy, an atmosphere fitting to theses of Classical Economists continued until 1920s. Until then, in addition to that there was not remarkable unemployment in economies, the incomes increased in a stable way and general level of prices kept its stability. But, from the end of 1929 on, the existing balances started to go out of order on a serious level. While the number of unemployed in USA was 1.5 million in 1929, this number reached to 13 millions in 4 years by increasing 10 times. Likewise, while USA had a production of goods and services which made 103 billion dollars, this number 702 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo remarkably decreased to approximately 55 billion dollars in 1933 (ġıklar,p.249). This rate of decrease was 40 per cent in Germany, approximately 30 per cent in France, and 10 per cent in England (Yıldırım, Karaman…,2009, p.13). These negative indications about USA and some European countries were observed almost all around the world and this incident was historically recorded as First World Economic Depression. Crisis of 1970 The second most severe crisis after the First World Economic Depression is the Crisis of 1970. The most important reason for this crisis was that OPEC countries increased the oil prices to four times higher than before. As a result of the over increases of oil prices, important rise in the general level of prices occurred. Along with the rise in the general level of prices Gross National Product also decreased on a great level. This situation was historically recorded as ―stagflation‖ (Parasız, 2006, p.313). The Crisis of 2008 After the Crisis of 1970 which was named as Oil shock, the most important crisis that deeply affected World economy is The Financial Crisis of 2008. This crisis was seen as problems in the payback of mortgage credits in USA and its effect was felt all around the world in a short period of time. The most common effects of this crisis were seen as; decreases of Gross National Products, increasing unemployment rates and common corporation bankrupts. Global Crises and Turkey The Crisis of 1929 and Turkey The first of crises that deeply affected World Economy is the World Economic Crisis of 1929. This crisis affected both European economy and the US economy. The crisis caused result such as important decreases in production, mass unemployment, foreign trade deficits and which emerged with stagnation, and decrease in the level of wealth which emerged in relation with all these. During the period of World Economic Crisis of 1929, Economy of Turkey determined an economy politics which had started with Ġzmir Economics Congress of 1923 and had determined its objectives. In accordance with these objectives, decisions of investment and production leaded by the state were made and started to be applied. (Kılıçbay, 1992, p.100) Yet, ―World Economy Depression‖, which had in early 1929 and of which the effect was felt all around the world, restricted especially the export in Economy of Turkey that had not been opened to abroad yet (Kılıçbay, 2006, p.101). Economy was in quite a gradual yet a determinate development stage which would make the infrastructure of the developments of following periods (Kılıçbay, 2006., p. 101). The Crisis of 1970 and Turkey OPEC had increased oil prices to 4 times higher in a short time in 1972 and these price increases had continued with interruptions in the following periods. This situation deeply affected both world and Economy of Turkey (Kılıçbay, 2006, p.153). Foreign Exchange reserves rapidly decreased, internal prices rose, inflation, unemployment and stagnation were experienced simultaneously in this period. The effect of this incident, named as ―Stagflation‖, became devastating on economies. (Karluk, 2005, p. 4040-405, Kılıçbay, 2006, 153). Turkey was greatly affected with its inflation rate rising up to 100 per cent and 0 per cent growth rate in the period between 1973 and 1980 (Kılıçbay, 2006, p.156). Asian Crisis of 1998 and Economy of Turkey After a very rapid growth, South Asian Countries went into a great depression in the last quarter of 20 th century. The following chart clearly puts forward this situation (Parasız, 2006, p.318.). 703 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Countries Indonesia Malaysia Korea Thailand Average 1970-1996 1997 1998 6.8 4.7 -15.5 7.4 7.8 -4.7 8.4 5.5 -6.5 7.5 -0.4 -7.0 7.5 4.4 -8.4 Chart: Growth Rates at Some Asian Countries As it is seen in the chart, while Asian countries grew on average 7.5 per cent, this rate decreased to 4.4 per cent in 1997 and to -8.4 per cent in 1998 in the period of 1970-1996. As a result of South Asian Crisis, Indonesia Rupiah, Korea Won and Malaysia Ringgit devalued at a rate of 60 per cent. Since TL was too valuable in this period, Turkish Goods faced unfair competence with South Asian origin goods (Parasız, 2006, p.318). Great Economic Crises Turkey Experienced after 1980 Crises of November 2000 and February 2001 in Economy of Turkey Turkey legislated on a foreign exchange hoe, which anticipated the approximation of pre-declared devaluation and inflation, to be valid by 1 January 2001. But foreign trade balance-sheet deficit grew as a result of that TL was initially too valuable, that interest rates decreased rapidly and that consumption spending and export increased in relation with this (Parasız, 2006,p.318). Meanwhile, since the deficits of state banks grew and Demirbank could not fulfil its undertakings Crisis of 15 November 2000 was experienced (Parasız, 2006, p.317-318). The first banking crisis occurred in 1994 in Turkey. In this period 3 banks were cleared. Banking sector grew 18 per cent by displaying a recovery in 1995. But the sensitivity of banking sector toward liquidity and interest rates increased in 2000 as a result of Asia Crisis of 1998 and earthquake disaster which was experienced in 1999 in Turkey (Karluk, 2005, p.361). As a result of the crisis in November 2000, 9 banks were transferred to TMSF (saving deposit insurance fund). This crisis also paved the way for the crisis in February 2001 (Yılmaz-ġen, 2006, p.325). Crisis of November 2000 in Turkey is a crisis of banking to a great extent. Such a result was inevitable when 100 per cent reassurance provided for investments and socio-economic conditions of the period came together. Crisis of February 2001, which is the most profound crisis ever, burst out in Turkey when the effects of this crisis and wrong policies of the period were combined with political risks. In February 2001, ―flexible rate of exchange‖ was facilitated by resigning from firm money policy which had been used for 14 months. The interests had risen to 7500 per cent in 21 February 2001, and Ġstanbul Stock Market decreased 18.1 per cent, the worst ever. As a result of these developments, rate of exchange was left to fluctuation and while one US dollar was 686.500 TL on 19 February, it rose to 920.000 on 23 February and to 960.000 on 28 February. So, TL lost 40 per cent value against US Dollar in 10 days (http://www.econturk.org/Turkiyeekonomisi/krizdenkrize.pdf). Crisis of 2008 and Turkey Reasons for Financial Crisis of 2008 Financial crisis of 2008 was an all of a sudden event. It occurred as a result of the combination of many negative developments in world economy. The main reasons for the developments which had deeply affected World economy can be gathered under the following titles. a. Current deficits of USA which had been going on since 1990s and that this deficit increased more and more (http://blog.milliyet.com.tr/Blog.aspx?BlogNo=144073). b. Abundance of US Dollars in world markets due to current deficit of USA. c. Stagnation of Japanese economy due to first mortgage crisis in Japan ever in 1993 and therefore that Japanese had to drive the reserves they had to world markets (http://www.gazeteport.com.tr/EK ONOMI/NEWS/GP_356985). d. That the Hedge Funds started to find fund as a result of increasing Leverage rate (on record rates of 1*88) (Eğilmez, 2008, Reasons for Global Crisis) 704 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo e. Over securitization at financial markets f. Significant lack of auditing on major actors (Hedge Funds and Investment Banks, Morgan Stanley, Merrill Lynch etc.) at financial markets The combination of the reasons, which were given as main titles above, and financial balloon in the world burst out as a result of mortgage crisis in USA. This situation was followed by the bankrupts of some investment banks and mortgage banks of USA and England. Likewise; (http://economictimes.indiatimes.com/quickiearticleshow/3552098.cms), as a result of the crisis, Bank of America paid 4 billion US dollars countrywide for risky debts of mortgage debtors on 11 January. Northern Rock was nationalised after a financial crisis on 17 February in England. Bear Stears was sold to US investment bank JP Morgan Chase (2 dollars per share), US Treasure and Federal Reserve supported national housing market by an effective nationalisation of Mortgage finance companies; Fannie Mae and Freddie Mac on 13 July. Conclusion A great liquidity urge started in world economy which started first as a result of mortgage crisis and then as a result of explosion of huge financial balloon. This development which first burst out in financial sector, also started to affect reel sector in a short time. The negative developments in reel sector were observed all around the world in 2009 and it is inevitable that it will go on in 2010. These negative developments, which were felt all around the world, definitely affected Economy of Turkey and this effect will go on in the following periods. But the measures taken so far, determinate and stable policies toward preserving macroeconomic stability minimized the degree of effect. Loyalty to the applied stability program might minimize this degree of effect in the future. References Ahmet KILIÇBAY, Türk Ekonomisi, 4. Baskı, Türkiye ĠĢ Bankası Kültür Yayınları, Ankara, 1992. Alan M. Rugman, GlobaleĢmenin Sonu, Mediacat Yayınları, Oxford, 2000. Alan Rugman, GloballeĢmenin Sonu, Mediacat Kitapları, 2000. Aytekin Yılmaz, KüreselleĢme, Minima Yayıncılık, Ankara, 2007. Ġlker Parasız, Küresel Kriz, 9. Baskı, Ezgi Kitabevi, Bursa, 2009. Ġlker Parasız, Makro Ekonomi, 9. Baskı, Ezgi Kitabevi, Bursa, 2006. Ġlyas ġIKLAR (Editör), Ġktisada GiriĢ, Anadolu Üniversitesi Yayınları, EskiĢehir, 2009. Kemal Yıldırım, Doğan Karaman ve Murat TaĢdemir, Makro Ekonomi, Seçkin Yayınevi, 8. Baskı, Ankara 2009, s.13. Mahfi Eğilmez, Küresel Krizin Nedenleri, http://www.radikal.com.tr/Defaul t.aspx?aType=YazarYazisi&ArticleID=899956&Yazar=MAHF%C4%B0%20E%C4%9E%C4%B0LMEZ&Date=23.09.2008&C ategoryID=101 Rasim Yılmaz-Ali ġen, ―Finansal Krizler ve Finansal Krizleri Açıklayan Teoriler‖, Dünya Ekonomisinden Seçme Konular, Editörler;Fatih Çelebioğlu-Feride Öztürk, Seçkin Yayınevi, Ankara, 2006. S. Rıdvan Karluk, Cumhuriyetin Ġlanından Günümüze Türkiye Ekonomisinde Yapısal DönüĢüm, Gözden geçirilmiĢ 10. Baskı, Beta Basım Yayım, Ġstanbul 2005. http://blog.milliyet.com.tr/Blog.aspx?BlogNo=144073, Küresel Ekonomik Krizin Türkiye‘ye Etkileri ve Çözüm Yolları. http://economictimes.indiatimes.com/quickiearticleshow/3552098.cms, 2008: Year of global financial crisis http://www.econturk.org/Turkiyeekonomisi/krizdenkrize.pdf http://www.gazeteport.com.tr/EKONOMI/NEWS/GP_356985, Son 70 yılın en kötü yılı: 2008. 705 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 210 Title A name given to the resource The Global Financial Crisis Of 2008 And Turkey Author Author KILIÇ, Ramazan Abstract A summary of the resource. The First World Economic Crisis that started in 1929 and rapidly influenced all the countries around the world resulted in stagnation, common unemployment, increase in foreign trade deficits and consequent decrease in the level of welfare. The policies initiated in order to decrease and eventually delete these effects of the crisis could only give results many years later. However, erasing the effects of the first crisis was not enough to put an end to the world crises. In 1970 a new crisis bringing along worse results than the previous, began. During this period of both inflation and stagnation, the results have been more destructive. The third major crisis that affected the world economy deeply is, of course, the Global Financial Crisis of 2008. This crisis has affected all the countries around the world and its effects are still visible. In this respect, the Turkish Economy was also influenced by this crisis. In this paper, firstly, economic crises were analyzed, and then the global crises were evaluated from the perspective of Turkey. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/8c9e756311ea94a898ae9f3278e59e6c.pdf cb7f3bc2e9e74e72313da4c7b67d32e7 PDF Text Text 2nd International Symposium on Sustainable Development, June 8-9, 2010 Sarajevo Social Life in the Poems of Classical Turkish Poets from the Balkans Zülküf KILIÇ Tuzla University, Faculty of Philosophy, Turkish Language and Literature Department, Tuzla, Bosnia-Herzegovina kiliczulkuf@hotmail.com Abstract In many poems, it is possible to see how most of the classical Turkish poets and especially Ottoman Divan poets played active roles in the social life with their poems and vigorously work to direct the society and to open up new prospects by preferring a literary style which transcribe the deficiencies and failures of society instead of a passive attitude against the social issues. To reveal the bond of literature, which we analyzed sociologically, with social life, we chose Classical Turkish poets from the Balkans as the reference of our study. Keywords: Balkans, poets, social, life, poem. Introduction Communication, which started with the existence of human beings, and words, which is the most important element of communication, became the strongest and essential carrier of culture through language. The efforts to express the words beautifully and effectively gave birth to literature and literature always included aesthetics within itself. No doubt that the literature to seek the beauty didn’t cause it to be just an aesthetic tool. Without interfering to the nature of literature, in other words without touching the words that are gathered together for obtaining beauty, saying that literature will not be foreign to the social life, seeing the natural organic bond between social life and literature will not be an interference to the aesthetic characteristic of literature, on the contrary it would be a realistic and true approach to its wide content integrity. Of course, literature doesn't have a function as to reflect the social life as it is, however stating that literature is a space that only opens its window to aesthetics within its ivory castle completely out of the boundaries of social life will be a total misinterpretation of literature. Sociology of literature which is based on the literature and society relationship has the tendency to perceive literature from a totally different perspective. Sociology of literature makes effort to analyze social conditions with the things it obtained from literature and observations, and to find sociological connections by taking the literature as the basis. Literature is the name of one of the self- or society-oriented abstract creation forms of the individual. However the thing we referred as personal abstract creation isn’t performed only with a single element. This is something constructed on social basis. Like other intellectual activities, literature is the transfer of knowledge to consciousness and consciousness to language. Besides explanatory and objective scientific fields, art and literature penetrate into the surface of social life, too. In this respect, there is a need to analyze literary texts and examine what kind of relationship there is between these texts and social reality in order for the social analyses to reach healthier results. The poems especially the ones focused on real life in literature, directed our attention to sociology of literature. This kind of poems lived their brightest periods during the social, political, economical and moral corruption and degeneration. Generally their target is society, cruel and repressive administrators, laws and rules that caused these moral corruptions, customs and traditions, and bad economies. Briefly their target is everything that's bad in the social life and everyone, every mentality and idea that caused this badness. Since intervening in deficiencies and failures of social life in parallel with the divine thinking beyond personal anger and jealousies is more dominant in poems whose subject is society, the poems which doesn’t dissociate themselves from life tend to be more objective and to remove and repair observed faults in the social life. For this reason, when we look from the social perspective, we can see that social poems abstain from the personal things and they bear a constructive characteristic instead of a destructive one. Yet the subjects of social 420 �2nd International Symposium on Sustainable Development, June 8-9, 2010 Sarajevo poems are not eyes, noses, eyebrows etc. of someone, they are the faults that will harm the social progress and future. When we look from this perspective and observe that criticisms of the past are in line with the complaints of the present, it would be clear to us that social poems are essential for the future and welfare of societies. Social Corruption In other words, the thing we named as “degeneration” is not a cause of social corruption, it is the result. In societies whose political authority weakened and economy hit the bottom, moral corruption will be faster, and characteristics and behavior that were not seen in the society before will be observed. The society reaches to a point that the concepts such as "shame" or “sin” will be of secondary importance and stepping out of some social norms will not be found odd, instead it will be seen as natural. The fact that humans are alienated from innocence and stuck into the dirt of life and get corrupted, caused a wind of hopelessness to blew and fed these people to perceive life negatively. We can see the hopelessness portrait in the following poem that mentions degenerations in the general structure of the society, the forgotten characteristics such as divine aim, justness, and honesty. The hopelessness to increase among people as the dimensions of corruption enlarge can be perceived as a natural result. And for this reason, after a specific point people stop thinking big and start chasing their individual desires and thinking small. Mest olduğumuz yâd-ı lebinden güneh ise Bu devrde bes kim buluna bî-güneh ey dost Ahmed Paşa, Ode 21, 4. couplet It attracts attention to the facts that people are dehumanized by only desiring to own assets and smart people live in difficulties, that even beautiful people are degenerated as a prisoner of their own desires and people to show no sensitivity about subjects such as gossip. When corruption starts in a society, the existence of this is felt in all stages of the social life. Tendency towards loose woman; increase in dishonest, mean, dishonorable, corrupted men were other subjects that attention was directed to in that period. In these periods where material things were desired and the spirit was neglected, it is an inevitable ending for people to move away from the beauties such as goodness, loyalty by leaving aside all those behaviors which make humans who they are. The corrupted and distrustful characteristics which couldn’t go beyond being the cause of doubts in fellow creatures were emphasized. These mentioned corruptions were not just external; these also came from the individual’s internal being. We see that in people who don’t hesitate to trust others for their most valuable assets, now all these good qualities and the trust they have for each other are damaged. Now there is no one to trust in the world who will keep thousands of secrets. Corruption is not just in specific individuals or groups; its existence is felt in everyone somehow. When the society is corrupted, people cannot stay out of this social picture. Since people are the ones that make the society what it is. Âdemlik insân olmadır mi'râc-ı rûhu bulmadır Îsâ vücûda gelmedir nefh ile Meryemden garaz Hayâlî, Ode 231, 4. couplet And these behavior patterns of power owners who abandoned some of their good qualities accustomed in the society were not welcomed by poets, they are criticized. Ehl-i fazlın bilinir kadri senin kapında Hazretin alsa eline yine mizân-ı kerem Ahmed Paşa, Eulogy 27, 39. couplet And the changes and corruptions in the desires and essences of those on the top are degeneration. Dedi kadd-i bülendimde anunçin eğridir zülfüm Ki meyl ettikçe bâlâya olur dûd-ı siyâh eğri Ahmed Paşa, Ode 332, 5. couplet The fact that majority of the people in the society to be degenerated, not being able to find, see a single person as a true friend, someone to relieve you causes people to be alone in the crowds, and single among the unities. 421 �2nd International Symposium on Sustainable Development, June 8-9, 2010 Sarajevo And people to be toughen by arrogance and incapacity that rise in line with this toughness, lose of good qualities such as being sensitive to the problems of others are other examples of corruption and this negative change. The drastic decrease in the number of people, who can be human with their essence, integrity and every behavior instead of their appearance, is the sign of times where hopes are gone, the lights are off, and a dark future is ahead. People feel really sorry for loosing unifying traits such as friendship and kinship in the society; however they are not doing anything. And time to take away all those wise, insightful, trustworthy people and to clean them from all these beautiful traits can only be observed from a distance with desperate and tired eyes, and no power can be found to fight against the time that takes away all those beauties one by one. The fact that those who are corrupted with all the ugliness of the world to be happy with this situation instead of thinking to get rid of all these ugliness is a sign which shows how a weak role the humankinds started to play. Hôş gelir ehline âlâyiş-i çirk-i dünyâ Câme âlûdeliği zînetidir bakkalın Sabit, Ode 221, 4. couplet Trust, which is the main brick of a society and which should offer comfort to the society, to disappear among people of this time is another dimension of corruption. Aldanma uyup her girîve-i rûbâha Sâbit sığın ol kerîm olan Allâh’a Gör vâkı'a-ı Yusuf ü gürk-i çarhı Đhvân-ı zemân ipile inme çâha Sabit, (Musajjac) Quatrain 1 Changes in the Approach to Honor and Shame Concepts Giving up acquiring some of the values after a while is a sign that sanction power of social norms are decreased and individuals adapted to the new condition. Of course this new approach is a material of criticism when it is assessed within the general rules of the society. The tendency of those, who have weak values of honor and shame in the society, to disgracefulness was criticized. Sabit who mentioned the unkindness of parents and the weakness of honor concept in the society also attacked amorality and corruption of the generation. Dünyâyı tokuz dolaşsa âdem bulamaz Baba-yı şefîk bir selîmü'l-bâli Ferzend-i nüh âbâ-yı felek olmakla Ebnâ-yı zemâne heb tokuz babalı Sabit, (Musajjac) Quatrain 8 Inequality Inequality concept is a fact that emerged in the relationship of the much stronger one and the weak one. This concept generally acquires currency in rebellious situation. Hayreti, who couldn’t solve why the inequality dimension is high among people and the difficulty of understanding this situation, questioned the reason of this situation. Kamu bir âdem oğlu iken insân Kimi bende kimi mevlâ nedendir Hy.K.17-15 'Anâsırda berâberken bu mahlûk Kimi ednâ kimi a'lâ nedendir Hy.K.17-16 Kimisi eylemiş dûzahda mesken Kimine Cennetü'l-Me'vâ nedendir Hayretî Eulogy 17, 15 and 16. couplets Ahmet Pasha who reacted against the inequality concept that emerges at the point where people with 422 �2nd International Symposium on Sustainable Development, June 8-9, 2010 Sarajevo different financial capabilities or different qualities cannot be collected at the humanity common denominator drew a portrait of hopelessness and desperation. Olma ey dil müşterî yârin metâ’-ı vaslına Kim senin fakrın kavî anın gınâsı ber-kemâl Ahmed Paşa, Ode, 183, 8. couplet Corruption and Bribe Making things done with bribe and doing things with bribe is a social degeneration complained every period. Fuzûlî complaints about public officers who don’t do any job without taking a bribe in its famous work of Complaint “I said hello, but they didn't accept as it wasn’t a bribe”. The criticism of Tûtî-i Latîf in the subject of a qadi known with the name Koca Keşiş to become the qadi of Kırk Kilise by giving Head of Financial Department Iskender Çelebi hundred silver coins is important since its shows that corruption started in the titles such as qadi, professor in the XVI. century. Vermese yüz papası Koca Keşîş Mansıba kimse râzı olmaz idi Olmasa idi papası el-hâsıl Kırk Kilîseye kâdî olmaz idi******************** When the bribe claims increased about Iskender Çelebi, he was discharged from his job. With the discharge of him, Emâni who was one of his fellows criticizes him with a historical stanza. Đrtişâ kasrını yaptıkda Sikender Çelebi Tahtasın sîmden ettirdi vü zerden mîhin Der ü dîvârını nakş eyleyicek ol dânâ Kati açık boyadı çog ediben zirnîhin Münteşîr olıcak efvâha peyâm-ı ‘azli Hâtıf-i gayb dedi rüşvet ile târihin†††††††††††††††††††† Sabit from Bosnia cannot understand those who take bribe without satisfying with the thing they deserve and questions this situation. Âb-ı ruh-ı kanâ'ati ni'met bilen niçin Mahcûb-ı dâğ-ı nasiyye-i irtikâb olur Sabit Eulogy 13, 51. couplet Conclusion The literature’s relationship with other scientific branches in line with its place within the civilization history enlarged the enlightenment scope of the literary works. As a matter of fact the products under the heading of literature reveal the beliefs, life styles of the society besides feelings and thoughts. Besides these; social relationships, mythological values, behavior patterns and all kinds of natural events reflect into the scope of literature and find a place for themselves among the syllables. When we look at the interdisciplinary relations, we can see that the sciences have close, distanced or indirect connections with each other. Even though the relationship between literature and sociology is primarily seen with concrete indications such as contribution of literature to social studies and sociology to be a source for literature; they also have a parallel dialog among them in terms of method, interaction and criteria. As general history which follows a historical process, history of literature also analyzes and explains spiritual and physical developments of nations based on literary sources. The works that found a body and collected under the roof of literature that nations created throughout centuries are analyzed by various scientific ******************** F. KILIÇ Meşâ’irü’ş-Şu’arâ (Âşık Çelebi Tezkiresi), (Yayınlanmamış Doktora Tezi), Gazi Üniversitesi, Ankara, 1994 s. 376. †††††††††††††††††††† M. ĐSEN, Künhü’l Ahbar’ın Tezkire Kısmı, s. 198 (Gelibolulu Âlî, Emânî’nin, velinimeti olan Đskender Çelebi için böyle bir eleştiri yapmasını nankörlük olarak görür.) 423 �2nd International Symposium on Sustainable Development, June 8-9, 2010 Sarajevo branches or used as a reference. At this point, the history of literature which is an important sub-branch within the general history helps sociology and facilitates its task. That’s why a solid history of literature plays a special role in the analysis of national literature both in terms of sociology and sociology of literature. When we look from a wide perspective, we see that the degree of literature’s impact area and its connection to other scientific field has a pluralistic center and perspective. The criteria and methods used for analyzing the sources literature and sociology fed on and the degree they affect each other are also important. Sociology and literature to get closer to each other has a role in knowing the unreflected sides of power and achievement both in terms of writing and creating texts. Besides this, the literary work takes the data and qualities that are required to fictionalize the world expressed with words from the rational world. By this way, we also see a direct reflection of the real world in the literary works. And this real world and social creation chain brings literature and sociology closer. Literature and all the other art branches cannot be alienated from the society that they are living in. Even though the poets from Balkans lived at a place far away from Anatolia, they weren't indifferent to the realities of both Anatolia and the land they were living on, and they drew the picture of the society in their poems. References ÇAVUŞOĞLU, Mehmed, M. Ali TANYERĐ, (1981), Hayretî Dîvân, Đstanbul Üniversitesi, Edebiyat Fakültesi Yayınları, Đstanbul. ĐSEN, Mustafa (1995), ÂLÎ (Gelibolulu) Künhü’l-Ahbar, Atatürk Kültür Merkezi Yayını, Ankara. KARACAN, Turgut SABĐT, (1991), (Bosnalı Alaaddin) Sabit Dîvânı, Cumhuriyet Üniversitesi Yayınları, Sivas. KILIÇ, Filiz (1994), Meşâ’irü’ş-Şu’arâ (Âşık Çelebi Tezkiresi), (Yayınlanmamış Doktora Tezi), Gâzi Üniversitesi, Ankara. TARLAN, Ali Nihat (1992), Ahmet Paşa Dîvânı, Akçağ Yayınları, Ankara. ------------------------ (1992), Hayâlî Dîvânı, Akçağ Yayınları, Ankara. 424 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 729 Title A name given to the resource Social Life in the Poems of Classical Turkish Poets from the Balkans Author Author KILIÇ, Zülküf Abstract A summary of the resource. In many poems, it is possible to see how most of the classical Turkish poets and especially Ottoman Divan poets played active roles in the social life with their poems and vigorously work to direct the society and to open up new prospects by preferring a literary style which transcribe the deficiencies and failures of society instead of a passive attitude against the social issues. To reveal the bond of literature, which we analyzed sociologically, with social life, we chose Classical Turkish poets from the Balkans as the reference of our study. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/0cdb4f475047c474f07f561b811628c7.pdf 77c62548f52325775df2f3abf7f888de PDF Text Text 2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Increasing Importance of Independent Audit of Financial Statements in Developing Countries Hilmi KIRLIOĞLU Prof. Dr., Sakarya University Turkey hilmik@sakarya.edu.tr Ali AKAYTAY Lect., Duzce University Turkey aliakaytay@duzce.edu.tr Abstract: In an economy, basic function of money and capital markets are to ensure the converting savings into investment. Unlike the money markets in the capital markets investors individually may choose the investment tool directly which they want to buy. It has great importance for a country‘s economy that investors to convert their savings effectively into investment. This is possible only if the reliable and timely information need of investors are provided. In this respect, the importance of the subject of accurate and reliable financial information of financial statements announced to public periodically that effect directly the price of investment tools in the capital markets is increasing day to day. Today accurateness and reliability of announced financial informations are seriously examined by users of informations that are announced by companies like shareholders, investors, lenders, consulting organisations and public. First the question ―which factors effect the reliability and accurateness of announced financial informations‖ will be discussed in this paper. And the increasing importance of independent auditing will be emphasized. Besides, in today‘s economical conditions, the factors that are complicating the role of independent auditor and possible technological tools that can be used to increase the efficiency of auditing by eliminating these factors will be addressed. Introduction Some recent events and developments in business and especially in auditing environment which will be discussed below, have highlighted some problems in the auditing process. As a result of these events, it can be seen clearly now that auditors need to take the necessary steps to restore the public confidence in developing and developed capital markets. It‘s clearly understood that various arrangments must be done about the auditing process. Events in the begining of 2000‘s start with Enron – Arthur/Anderson and continue with the others reduced investors confidence to financial statement that are passed from independent auditing. Enron's stock price, which hit a high of US$90 per share in mid-2000, caused shareholders to lose nearly $11 billion when it plummeted to less than $1 by the end of November 2001. The U.S. Securities and Exchange Commission (SEC) began an investigation, and Dynegy offered to purchase the company at a fire sale price. When the deal fell through, Enron filed for bankruptcy on December 2, 2001 under Chapter 11 of the United States Bankruptcy Code, and with assets of $63.4 billion, it was the largest corporate bankruptcy in U.S. history until WorldCom's 2002 bankruptcy (Benston, 2009:497). The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron undoubtedly is the biggest audit failure (Bratton, 2002:61). Even, for Krugman (Krugmen, 2002) the most important event lived in recent years that made critical changes in American society was not September 11, it was the event of Enron. On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history at the time (since overtaken by the collapse of Lehman Brothers and Washington Mutual in September 2008). WorldCom changed its name to MCI, and moved its corporate headquarters from Clinton, Mississippi, to Dulles, Virginia, on April 14, 2003. Under the bankruptcy reorganization agreement, the company paid $750 20 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo million to the SEC in cash and stock in the new MCI, which was intended to be paid to wronged investors (SEC report, 2009) A well known fact is that too many companies have problems with their bookkeeping. Siebel Systems, Qwest and Xerox are examples of companies that have been ―cooking the books‖. We can call the year 2002 ―the horrible year‖ from a bookkeeping point of view. Unfortunately the year 2002 was not an exception. This manipulation is still going on. A fairly recent example is the Dutch retail trade company Royal Ahold, whose subsidiary in the USA manipulated the operating profit. There are also examples from earlier years. Two of them com from the banking world, where the UK Baring‘s Bank and the Japanese Daiwa‘s Bank lost millions of dollars because of they did not have effective control systems. The third one is a Finnish multinational company, whose subsidiary in Italy overestimated the work in progress and recorded fictious sales. Although the above examples are the tip of the iceberg, they reflect the changing nature and demands in the audit process (Koskivara, 2004:192). In this point the importance of control of business operations and independent auditing can be seen clearly. In the next title concept of accounting manipulation will be discussed. Concept of Accounting Manipulation In the literature and practice several concepts are used in the context of manipulation of financial statements. These concepts are quite similar to each other in some publications to be used interchangeably although there are some differences between them. In this context, the following concepts are to the fore in the literature:      Earnings management Income Smoothing Big Bath Accounting Aggressive Accounting Fraudulent Financial Reporting Each of these concepts have similar consequences and main purpose as to give a different impression to financial information users and affecting their decisions are taken into consideration. Before diving into what earnings management is, it is important to have a solid understanding of what we mean when we refer to earnings. Earnings are the profits of a company. Investors and analysts look to earnings to determine the attractiveness of a particular stock. Companies with poor earnings prospects will typically have lower share prices than those with good prospects. Remember that a company's ability to generate profit in the future plays a very important role in determining a stock's price. That said, earnings management is a strategy used by the management of a company to deliberately manipulate the company's earnings so that the figures match a pre-determined target. This practice is carried out for the purpose of income smoothing. Thus, rather than having years of exceptionally good or bad earnings, companies will try to keep the figures relatively stable by adding and removing cash from reserve accounts (known colloquially as "cookie jar" accounts) (Investopedia, 2010). The term ‗earnings management‘ embodies a wide array of accounting techniques used by management to manipulate the earnings of an entity. While there exists no single accepted definition of earnings management, the accounting literature provides various descriptions of the practice. Schipper (1989:92) describes earnings management as ― . . . a purposeful intervention in the external financial reporting process, with the intent of obtaining some private gain . . .‖. Similarly, Healy and Wahlen (1999: 368) explain that earnings management occurs when managers use discretion to manipulate financial information ― . . . to either mislead some stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reported accounting numbers.‖ Consistent among these definitions is the notion of intentional manipulation of reported numbers by management. However, since managerial intent is unobservable, the current definitions of earnings management are ― . . . difficult to operationalise directly using attributes of reported accounting numbers . . . ‖ (Dechow and Skinner, 2000:238; Powell et al., 2005:9). One of the hardest accounting frauds to spot is big bath accounting. When a company is doing really bad and has no chance of meeting earning expectations, unscrupulous management would begin writing-off every expense and asset they could imagine. As a result, future expenses are reduced significantly and naturallyearnings increase. In other words, the company is taking a big bath in the worst year so it can wipe its slate clean. This almost always guarantees record-breaking earnings in subsequent years, likewise performance bonuses (Yuan, 2008). Numerous definitions of the term ‗fraud‘ have been proposed within the academic and professional literatures. In the criminological, and most general, sense, fraud refers to ― . . . any crime for gain which uses deception as its principal modus operandi‖ (Wells 1997: 4). Fraud encompasses a range of deceptions including 21 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo employee fraud, payroll fraud, insurance fraud, credit card fraud, identity theft, bribery, kickbacks, insider trading, and the deliberate falsification of financial reports. Financial reporting fraud involves intentional deceit on behalf of the preparers of the financial reports, and attempted concealment of that deceit (Albrecht 2003; Albrecht and Albrecht 2004). Such actions result in the financial reports not representing a true and fair view of the company‘s underlying economic position. Fraudulent accounting can be perpetrated in a variety of ways including improper revenue and expense recognition, fictitious revenues and assets, over and/or undervalued assets and liabilities, improper disclosures, and related party transactions (Powell et al., 2005:6). Incentives of Accounting Manipulation Preparing and disclosure of reliable financial statements are in the responsibility of company managers. As a whole, even the company management may work to fulfill its responsibility but some reasons may require financial information users questionize the financial statements that they use in their decisions. Each day growing size of businesses caused increasing financial operations and workload of accounting departmants. Intense workload in the accounting departments, increase the likelihood of erroneous action, such as the increase in the number of employees also increases the likelihood of fraudulent transactions. Financial information produced by companies to be approached with suspicion to justify a reason other users of information are largely outside of business. Users of financial information outside the business can get from the source itself is very difficult or even impossible. Operating results of companies are prepared and disclosed by company managements. This situation also makes risky the reliability and accuracy of produced information. Because the accuracy and reliability of produced information are based on the behaviours of managers and its always possible to give fault information intentionally or unintentionally. As a result of research covering 1982-1992 in United States done by Dechow, Sloan and Skinner (1996) gives the common characteristics of companies that made accounting manipulation are listed as follows:     The majority of board members, are also consists of the general manager and other senior managers of the company, The majority of the general managers are also the founder of the company, The majority of companies don‘t have a partner that have a significant share and also is outside the management, The majority of companies don‘t have independent audit committee. As a result of management structure to focus on specific individuals in this way causes in corporate governance issues, to be opened to manipulation and abuses depending on the intentions of the authorities. Also according to some researchs (Beattie, 1994; Carlson and Bathala, 1997) its understood that for their benefits company managers may apply to manipulation on financial information. As a natural result of accrual basis accounting, managers have to decide on time and amount of accrue of income and expenses. This situation when combined with various policies and objectives inevitably leads to manipulation of financial information. In other words, accrual accounting and the flexibility that it gives to managers is one of the main reasons for the manipulation of financial information. Companies that fail to reach analysts' estimates for multiple quarters can see their stocks drop precipitously. When Procter & Gamble warned that it would not meet analysts' consensus forecast in the first quarter of 2000, its stock price fell 30%. When P&G issued further warnings just before the end of the second quarter of 2000, the stock price fell another 10% and P&G's CFO was fired. As reported in CFO Magazine (December 1998), one CFO told SEC Chief Accountant Lynn Turner that when the CFO warned an analyst that the company might just miss consensus estimates, the analyst told him, "You're a bright guy; you'll figure out how to make it." Many companies depend on financial leverage in optimizing returns to stakeholders. To establish a business's creditworthiness, debt rating agencies use much of the same information as stock analysts. A slight drop in earnings or negative expectations about future prospects could cause a decline in a company's debt rating, increasing its cost of capital and diminishing prospects for new debt issues. Companies in highly competitive industries may want to maintain an edge in revenues or market share. In 1998, Sensormatic Electronics, a maker of security systems, actually stopped its clocks, which stamped shipping dates and times on finished products, 15 minutes before noon on the last day of a quarter, so it could continue to make customer shipments within the quarter until it had reached its sales target. The SEC brought charges and Sensormatic settled without admitting or denying misconduct. Many debt and lease agreements, as well as other contractual arrangements, contain covenants in which a company agrees to attain certain 22 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo earnings, debt, or other ratios, or limit payments to shareholders. When a company is in danger of missing one of the covenants, the agreement may provide for immediate repayment or other specified performance. Manipulating earnings slightly can improve ratios enough to avert such dangers (Duncan, 2001). Because of the reasons listedabove, it is unavoidable that independent auditors have to examine and tell his opinions about financial statements prepared by business managements that are going to be disclosed to public. Effects of Independent Auditing for More Trusted Financial Statements Because of the reasons listed above it is hard for investor to accept the reliability of financial information easily that they base upon their decisions. It is needed to be decreased the risk of being unreliable of financial information and some potential precautions can be thought for that. One precaution maybe financial information users to audit the information they use their own. Reliability of the information coming out of business before it is used to examine whether the need is clear. One way to do this from the users of financial information are to control themselves. However, this application is often impossible because of information users usually not to know the control procedures, lack of time. Sharing the risk of unreliable risk of financial information maybe thought as another precaution. Despite this logical path, and the legal implementation of the management of compensation seems to be a difficult process (Bozkurt, 1999:20). In accounting and auditing, internal control is defined as a process effected by an organization's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives. It is a means by which an organization's resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organization's resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks). In spite of the size of publicly traded companies are required to establish internal auditing system in their structure. In this sense, theoritically, internal control systems can be seen as a tool for public offering of the financial statements as accurate and reliable. However, according to Young (2002:18), in examined accounting manipulation events it‘s seen that internal control systems can‘t do the expected mission to offer financial information users to have exact reliable financial information. The inadequacy of the precautions discussed above, requires an independent audit. In other words it seems as the most effective method in the time and cost issue that an independent person that‘s confidential for all parties of information users will going to audit if the information prepared and disclosed by company management is reliable and accurate. Main task of independent auditor is to form a reasonable opinion about the financial statements of company for information users will basis their decisions confidentally. Independent auditors are under a big responsibility because of that his opinion affects all investment decisions of investors, in other words financial information users. Reliable information independently audited, will be guided in the right way in their decisions to all parties related to financial information of companies. Conclusions As a result of several recent developments in capital markets and the business world, financial information users need of accurate and reliable financial information is increasing every each passing day. To meet these needs and capital markets to work properly, is only possible with effective independent auditing. While independent audit function undertake such an important role like this, for some reasons like the companies and transactions they operate are growing each day, it is not easy for independent auditor to achive his aim with classical auditing methods. It‘s clear that auditor will need new tools for more effective auditing in today‘s business world. For that academicians and practitioners have to give more attention on this subject. As a result of information technology, computer operations capabilities of the software programming and particularly with the rapid developments in the increasing usage of these technologies to be adopted by businesses recording and reporting business transactions become more easier when compared with past. According to this we can say that its not easy even impossible auditors to audit their clients with classical manual methods and it‘s clear that they must use these new technological tools for more effective audits. In recent years another useful tool that academicians and practitioners work on for more effective audits is analytical review based on artificial neural networks. Several systems based on artificial neural networks and in widespread commercial use for accounting and financial tasks are described by Brown et al. (1995). These include:  FALCON, used by six of the ten largest credit card companies to screen transactions for potential fraud. 23 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo     Inspector, used by Chemical Bank to screen foreign currency transactions. Several ANNs used to assist in managing investments by making predictions about debt and equity securities as well as derivative instruments. Several ANNs used for credit granting, including GMAC‘s Credit Advisor that grants instant credit for automobile loans. AREAS, used for residential property valuation. Developers of commercially used ANNs generally consider the inner workings of their systems to be proprietary information that gives them a competitive advantage. As a result, artificial neural networks can be applied as a means of enhancing the effectiveness of independent audits and it can be said that its possible to have more successfull results when compared to traditional methods. We hope that our study draws attention to this important issue and will guide future research and applications. References ALBRECHT, W. S. (2003). Fraud Examination. Ohio, South-Western Thomson Learning. ALBRECHT, W. S. and C. Albrecht (2004). Fraud Examination and Prevention. Ohio, South-Western Thomson Learning. BEATTIE, V., Brown, S., Ewers, D., John, B., Manson, S., Thomas, D., Turner, M. (1994), ―Extraordinary items and income smoothing: A positive accounting approach‖, Journal of Business Finance and Accounting, Vol:21, No:6, pg: 791-811, September. BENSTON, George J. (November 6, 2003). "The Quality of Corporate Financial Statements and Their Auditors before and after Enron" (PDF). Policy Analysis (Washington D.C.: Cato Institute) (497): 12. Retrieved 2009-09-28. BOZKURT, N. (1999), Muhasebe Denetimi, Alfa Yayınları, Ġstanbul. BRATTON, William W. "Enron and the Dark Side of Shareholder Value" (Tulane Law Review, New Orleans, May 2002) p.61 BROWN, C.E., Coakley J.R., Phillips M.E. (1995), ―Neural Network Enter The Management Accounting‖, Management Accounting, Vol:76, No:11, s.51-57. CARLSON, S.J., Bathala, C.T., (1997), ―Ownership differences and firms‘ income smoothing behavior‖, Journal of Business Finance & Accounting, Vol:24, No:2, pg: 179-196, March. COAKLEY, J.R., C.E. Brown (2000), ―Artificial Neural Networks in Accounting and Finance: Modeling Issues‖, International Journal of Intelligent Systems in Accounting, Finance and Management, v. 9, No:9, p.119-144. DECHOW, P. M. and D. J. Skinner (2000). "Earnings Management: Reconciling the Views of Accounting Academics, Practitioners, and Regulators." Accounting Horizons 14(2): 235-250. DUNCAN, J.R. (2001), ―Twenty pressures to manage earnings‖, The CPA Journal, July 1 HEALY, P. M. and J. M. Wahlen (1999). "A Review of the Earnings Management Literature and Its Implications for Standard Setting." Accounting Horizons 13(4): 365-383. Investopedia (2010), http://www.investopedia.com/ask/answers/191.asp KOSKIVAARA, E. (2000), ―Artificial Neural Network Models for Predicting Patterns in Auditing Monthly Balances‖, Journal of the Operational Research Society, v. 51, s. 1060-1069 KRUGMAN, P. (2002), The Gread Divide, The New York Times, January. MCI Inc - SC 13D/A - LCC International Inc ." Securities and Exchange Commission. March 14, 2003. Retrieved on September 25, 2009. 24 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo POWELL, L., Christine J., Paul de L., Kim Langfield-Smith (2005), ―The Distinction between Aggressive Accounting and Financial Reporting Fraud: Perceptions of Auditors‖, AFAANZ Conference. SCHIPPER, K. (1989). "Commentary on Earnings Management." Accounting Horizons 3: 91-102. WELLS, J. T. (1997). Occupational Fraud and Abuse. Austin, Texas, Obsidian Publishing Company. YOUNG, M. R., (2002), Accounting Irregularities and Financial Fraud, A Corporate Governance Guide, Second Edition, Aspen Law & Business. YUAN, C. (2008), ―Big Bath Accounting Fraud‖, http://www.moolanomy.com/1048/big-bath-accounting-fraud/, December. 25 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 143 Title A name given to the resource Increasing Importance of Independent Audit of Financial Statements in Developing Countries Author Author KIRLIOĞLU, Hilmi AKAYTAY, Ali Abstract A summary of the resource. In an economy, basic function of money and capital markets are to ensure the converting savings into investment. Unlike the money markets in the capital markets investors individually may choose the investment tool directly which they want to buy. It has great importance for a country‘s economy that investors to convert their savings effectively into investment. This is possible only if the reliable and timely information need of investors are provided. In this respect, the importance of the subject of accurate and reliable financial information of financial statements announced to public periodically that effect directly the price of investment tools in the capital markets is increasing day to day. Today accurateness and reliability of announced financial informations are seriously examined by users of informations that are announced by companies like shareholders, investors, lenders, consulting organisations and public. First the question ―which factors effect the reliability and accurateness of announced financial informations‖ will be discussed in this paper. And the increasing importance of independent auditing will be emphasized. Besides, in today‘s economical conditions, the factors that are complicating the role of independent auditor and possible technological tools that can be used to increase the efficiency of auditing by eliminating these factors will be addressed. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/52384ce18734c15664424e963aa8ff5a.pdf c018ea1c1be3eb2cdad0a21fd263ad11 PDF Text Text 2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo International Differences In Fınancial Reportıng And Importance Of Harmonizatıon Hilmi KIRLIOĞLU Prof. Dr , Sakarya University, tel: +90 264 2956258 hilmik@sakarya.edu.tr Sema ÜLKÜ Lecturer, Duzce University, tel: +90 380 6817312 semaulku@duzce.edu.tr Abstract:Financial Reporting is reached informations that can be used for making decisions with financial issues by decision makers. Technological developments facilitated to access information but it is not enough. It is more important that financial information can be understood by all relevant. Comparability and transparency requirements in financial reporting and accounting have become more pronounced. Nevertheless, countries‘ financial reporting standards and structures of setting standards have varied. These differences have originated from structures of legal and financial systems, shareholding structure of companies and financial methods. The development of the accountancy profession level is effective on these differences. Harmonization is a process that could reduce differences of accounting practices and accounting regulations. Multinational enterprices have benefitted from harmonization efforts to compare financial reports for providing a competitive advantage. Key Words: Financial Reporting, Harmonization, Accounting Standards Introduction The basic function of accounting is to provide information for internal and external institutions. The institutions analyzing and processing this information, provided by accounting, rapidly achieve success. Rapid development in information technologies, removal of the duties, and decreasing tariffs have accelerated globalization of markets and business firms. Because of the increase in the international investments and multinational enterprises result in financial reports that are prepared through different accounting standarts and rules. Such a situation brings additional costs by money and time. Therefore, the uncertainity increases in international investment actions. Analyzing information to make investment decisions in a global environment is quite important for business success. Harmonizing accounting systems and standards is crucial for ndividuals and institutions in evaluating information provided by the financial statements. Importance Of Financial Reporting Financial reporting, is achieved that the topics which have included financial information that could be used in making decisions by decision makers. The Internet world has lost the concept of time and space their effectiveness and it has allowed to access that the individuals, institutions and organizations, nations or states to each other faster, cheaper and more profoundly. It is much easier than ever before that the economic environment and the financial statement users also needed access to information. But it is not enough that the easy Access to the information alone. It is more important that financial information can be understood by all relevant(Ağca,2003). Comparability and transparency requirements in financial reporting and accounting have become more pronounced. integrated financial reporting standards that responding to this need will increase the efficiency of the global market. Because accounting is an important element of the emerging global market and, it has kept the control of weakening and strengthening the effectiveness of market power. The responsibility for companies, have integration approach that financial reporting regulations which is published for the investors, creditors and auditors. 72 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo The Causes Of Difference In Fınancial Reporting Countries' accounting systems have many reasons to be different. Countries' different histories, traditions and customs, political and economic structures, legal systems differ between countries as a financial accounting and related developments have led to different financial reporting. Causes of differences in accounting systems can be listed like that:  Judicial system  Financial resources  Political and economic developments  Economical crisis  Taxation  Security exchange  National culture  Inflation  Specialization in accounting(Hoyle,2004) The factors that affect the accounting, is contributing to our understanding that the differences and similarities between countries. Do not forget that accounting is a social science and serve the society. Technical and social significance of accounting in order to remain useful, it must respond to the changing needs of society and it must reflect that the country's cultural, economic, legal and social characteristics. A Method For Reduction Of The Financial Reporting Difference: Harmonization Harmonization is a process that could reduce differences of accounting practices and accounting regulations and could compare the financial reports prepared by businesses which is operating in different countries. Standarts reduce the differences between financial reporting and they increase the benefits of the financial reports for user of financial statements. At the same time, standarts are instruments of harmonization to their country. This situation is especially very important for multinational companies. Harmonization standarts take part for solving the problems when the national standarts conflict with each other. There are a lot of factors to make essential the harmonization of international accounting standarts. They are;  The globalization of capital markets  Expansion of multinational corporations  Increasing the efficiency of the independent audit firm  Goal of creating economic union (Bayazıtlı and the others;2006). There are various benefits to canalise the international accounting standarts and harmonization:  They help to provide incremental cost savings in Multinational Companies.  They enhance relevance and comparability comprehensive to cross-border financial reporting  They help spread the High-quality accounting standards and applications to larger areas.  They cause increase the cross-border financing and trading of securities exchanges and the number of registered companies.  They raise to access the multinational corporations to foreign market and they can help increase the rate of recognition by consumers in these markets (Bekçi;2007). Despite these advantages, there are several factors must be taken into account to use the international standarts:  International financial reporting standarts, in countries which use the standarts, are required upgrade the qualifications of accountants and auditors  They must be taken into account on the difficulty of the transition from rules-based accounting to principlebased accounting.  A clear separation of tax legislation, recovery to tax-focused, complexity of international financial reporting standards are the most important factors which can be overcome with education( Aksoy;2005). Not to lag behind developments in the world, to use the same common language with international financial markets, to meet the demands of financial market information effectively and particularly transparency, adapting to the 73 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo principles of corporate governance and the EU in terms, transition to international financial reporting standarts is essential. The Compliance Process Of International Accounting Standards In The World Many studies have been carried for creating a common language in the accounting area and have been able to achieve standardization both at the national level and at the international level. The United Nations Intergovernmental Working Group on Accounting, Accounting Advisory Group of the European Union, The International Organization of Securities Commissions, International Federation of Accountants and International Accounting Standards Board are international organizations who have done important works in this field. In national level, USA, England, Germany, Canada and Japan have done important works for accounting standards(Karabınar,2006). International Accounting Standards Board, who is an conspicuous organization to the process of creating the International Accounting Standarts, have prepared the set of International Financial Reporting Standarts to eliminate different accounting practices around the world. It has aimed that the relevants could study comparable, understandable and responding to the needs of qualified financial figures. In accordance with this purpose, International Accounting Standards Board has included the countries ,which are effective the emergence of accounting standards, and their foundation to the process of creating accounting standards. It works on this point in consultation with all relevants. Also Financial Accounting Standards Board has worked in harmonization of accounting standards. Since 2002, these organizations have started to work together. The aim here is, to harmonize U.S GAAP (United States Generally Accepted Accounting Principles) and IAS (International Accounting Standards) and will be created to prevent different applications to standards in the future. The Critisism Of Harmonization Harmonization helps investors in making the right decisions. Proponents of harmonization adduce that harmonization is an advantage for investors in order to help determine the potential value of investments and to reduce risk in international diversification. Other hand, there are also some comments against harmonization. The most important of these views is the magnitude of the difference about current accounting practice in different countries(Çankaya,2007). Because of National Accounting Standarts‘ practitioners have difficulty in the application of International Financial Reporting Standards, their disabilities about applying standards, excessive costs of the application, political interests and legal regulations, they except the implementation of standards in national accounting systems. Conclusion Nowadays, The differences between the accounting systems of the countries have directed the accounting researchers to determine what the differences are then to resolve the differences. International Accounting Harmonization is the most remarkable proposal among the suggestions. With harmonizatin, companies with financial reporting standards will be able to access capital markets all over the world. Accounting standards which is internationally accepted, to recude costs in preparing consolidated financial reports will be valid anywhere in the world and aduiting of reports is more easier. The use of international accounting standards allows to evaluate multiple alternative about the financial events to reflect in accounting system. In this way, harmonization will provide a significant advantage about selecting the most appropriate method under the current conditions. References AĞCA, Ahmet (2003), ―Uluslar arasi Muhasebe Standartlarının GeliĢmekte Olan Ülkelerde Uygulanabilirliği ve Kabul GörmüĢlüğü‖, YayınlanmamıĢ Doktora Tezi, Anadolu Üniversitesi, SBE, EskiĢehir AKSOY, Tamer (2005), ―Finansal Muhasebe ve Raporlama Standartlarında UyumlaĢtırma ve UMS/UFRS Bazında Küresel Muhasebe Standartları Setine YöneliĢ Eğilimi‖, Mali Çözüm Dergisi, Sayı: 71, Nisan-Haziran, Ġstanbul S: 182–200 74 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo BAYAZITLI, Ercan ve Diğerleri (2006), Türkiye Muhasebe Standartlarına Genel BakıĢ, TESMER, Ankara BEKÇĠ, Ġsmail (2007), ―Muhasebe Meslek Mensuplarının Türkiye Muhasebe Standartları Hakkındaki GörüĢlerinin Değerlendirilmesine Yönelik Bir AraĢtırma‖, Muhasebe ve Denetime BakıĢ Dergisi, Sayı: 22 Mayıs, Ankara S: 27- 40 ÇANKAYA, Fikret (2007), ―Uluslar arası Muhasebe Uyumunun Ölçülmesine Yönelik Bir Uygulama: Rusya, Çin ve Türkiye KarĢılaĢtırması‖, ZKÜ Sosyal Bilimler Dergisi, Cilt: 3, Sayı: 6, S: 127-148 HOYLE, B. Joe and The Others (2004), Advanced Accounting, Seventh Edition, Mc Graw Hill Publishing Company, New York KARABINAR, Selahattin (2006), ―Muhasebe Ġklimini Küresel Düzeyde Yönlendiren KuruluĢlar‖ Muhasebe ve Finansman Dergisi MUFAD, Sayı: 31 Temmuz, Ġstanbul S: 141- 148 75 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 179 Title A name given to the resource International Differences In Fınancial Reportıng And Importance Of Harmonizatıon Author Author KIRLIOĞLU, Hilmi ÜLKÜ, Sema Abstract A summary of the resource. Financial Reporting is reached informations that can be used for making decisions with financial issues by decision makers. Technological developments facilitated to access information but it is not enough. It is more important that financial information can be understood by all relevant. Comparability and transparency requirements in financial reporting and accounting have become more pronounced. Nevertheless, countries‘ financial reporting standards and structures of setting standards have varied. These differences have originated from structures of legal and financial systems, shareholding structure of companies and financial methods. The development of the accountancy profession level is effective on these differences. Harmonization is a process that could reduce differences of accounting practices and accounting regulations. Multinational enterprices have benefitted from harmonization efforts to compare financial reports for providing a competitive advantage. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/6ed881a618f137c075489e2b71ae8925.pdf 9a1001ed8d830ec2683d3555c36c0433 PDF Text Text 2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Managerial and Supervisory Mistakes Leading to Foreseeable Consequence: Global Financial Crisis Niyazi KURNAZ Dumlupinar University- School of Applied Sciences Department of Accounting, Central Campus / Kütahya, Turkey nkurnaz@dumlupinar.edu.tr Hanife TOPAL Instructor, Dumlupinar University-TavĢanlı Vocational Higher School TavĢanlı / Kütahya/Turkey hanifetopal@dumlupinar.edu.tr Mustafa KAYIK Instructor, Dumlupinar University-TavĢanlı Vocational Higher School TavĢanlı / Kütahya/Turkey mkayik@gmail.com Harika ÖZKAN Instructor, Dumlupinar University-Tavşanlı Vocational Higher School Tavşanlı / Kütahya/Turkey harika_ozkan@hotmail.com Abstract: The global financial crisis that began in summer 2007, deepened in 2008 and looks set to run for some time and to have profound effects on the global economy. For the 2007 subprime crisis, we consider that there are also some particular aspects which characterize the actual crisis, like the increased role of financial innovations (the securitization and credit derivatives) and a very important contagion phenomenon which began within the American economy and spread over the global financial markets. The subprime crisis extended at international level, following four main directions: at the root of the crisis lies a fundamental inconsistency between financial globalization – the process of liberalization and deregulation driving the impressive growth of world financial markets – and existing public rules and policies at both domestic and international levels. On the other hand; complex corporate structures managing financial innovation causing excessive risk taking and excessive leverage due to lack of adequate supervision enhanced the global disease. In this paper after discussing the causes of the global financial crisis, we will put forward ways and policies to overcome the ongoing crisis in global level. Keywords: Global financial crisis, financial innovation, financial deregulation, financial liberalization, corporate governance Introduction We have heard the footsteps of coming financial crisis in 2007. The crisis was the consequence of complex interactions between a range of factors. The development of the crisis is quite aptly put in The Economist of April 3rd 2008: First there was disbelief and denial. Then fear. Now comes anger... (Eijffinger, 2008) The anger is of course caused by the failure of financial supervision, which will be scrutinized in detail further in this paper. The onset of the crisis in 2007 followed an extended period of unusually low real interest rates, easy credit conditions, low volatility in financial markets and widespread increases in asset prices that had generated large-scale but hidden vulnerabilities. When these vulnerabilities crystallised in the wake of repeated series of asset write-downs, key financial markets became dysfunctional and the solvency of large parts of the global banking system was challenged 32 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo (BIS, 79th Annual Report, 2009). In 2007 the depressed period has began in a local mortgage segment in financial markets in the US but it spread all over the world in surprisingly short period of time causing general economic recessions in developed nations as well as developing countries. The proximate cause of the crisis is reasonably well understood. It began with the subprime mortgage crisis in the U.S. Sub-prime lending, that is, mortgages given to borrowers who do not meet the credit standard cut-off for government-sponsored enterprises, rose steadily from just below $100 billion in 1996 to around $600 billion in 2006. In 2006, sub-prime lending constituted a whopping 22% of all mortgages issued in the U.S. As was to be expected, this resulted in a rise in the default rates among home loan borrowers, first noted in February 2007 and fully evident by August that year. As this happened and more homes came on the market, prices of homes began to fall. From mid-2006 to mid-2008 house prices in the U.S. fell at the rate of 10% per annum. This in turn meant that lending banks and financial institutions found their asset position weakening, since the values of the foreclosed homes were now less than when the mortgages were signed. Soon these institutions were, in turn, defaulting on their loans. As this fear spread, inter-bank and inter-corporate lending came to a virtual standstill (Basu, 2009, p. 3). This argument may be seen acceptable for most of the people but we should understand how a problematic that occurs in a small part of the market pushes the world‘s financial markets into a vicious circle. The shock on the American real estate market has been a starting point for the financial turbulences at international scale. At the end of 2006, an important number of clues have already announced the international financial markets crisis: depreciation of dollar denominated assets, degradation of banks financial indicators, reserves reduction and mortgage credit problems. Between 1997 and 2006, the houses prices increased with about 124% in the United States. The financial turbulences have begun before the subprime crisis. A first contagion phenomenon related to stock prices drop was signaled in emerging markets in May 2006. A second event of financial turbulences was represented by the Chinese capital market disorder in February 2007. The credit mortgage crisis in the United Stated followed (Albulescu, 2008). This financial crisis which began in industrialized countries quickly spread to emerging market and developing economies. Investors pulled capital from countries, even those with small levels of perceived risk, and caused values of stocks and domestic currencies to plunge. Also, slumping exports and commodity prices have added to the woes and pushed economies world wide either into recession or into a period of slower economic growth (Nanto, 2009). And yet many vulnerabilities were manifest from 2004–2006 in the UK and USA in ways that clearly showed inter-connections (Gills, 2008; Pettifor, 2006). Absolute levels of debt were rising and leverage levels were rising making debt servicing more interest rate sensitive. House prices were rising faster than incomes. The expansionary business models of some banks were increasingly dependent on the renewal of short term debt in wholesale markets. Investment banks and treasury arms of commercial banks were increasingly engaging in proprietary trading. Their role as prime brokers was expanding intra-financial multiplication and fuelling further securitisation and the creation of structured credit products. Speculative investment through other derivatives that were originally intended as insurance (credit default swaps, blended foreign exchange futures etc.) was creating a highly unstable asset class. These were all issues that made tenable the notion that the ongoing dynamics of the financial system were leading to collective qualitative changes. (Morgan, 2009) In summary, there are three basic and important specifications of the crisis. The first and the second reason point out excessive risk-taking and excessive leverage by financial institutions. These reflected an inconsistency between globalization and market governance that created the possibility of originating and trading assets under massive underestimation of their risk characteristics. It is the third feature however that sharply differentiates this from previous crises: the extreme level of opacity regarding the size and incidence of risks in the portfolios held by investors and intermediaries (EEAG Report, 2009). Several layers of securitization of loans and mortgages resulted in a loss of information and created network externalities across interconnected institutions, which made intermediaries and investors increasingly unable to assess how much risk was in their portfolio, eventually causing the illiquidity of markets directly or indirectly exposed to asset backed securities.( EEAG Report, 2009) From another point of view, the belief that markets tend towards equilibrium is directly responsible for the current turmoil; it encouraged the regulators to abandon their responsibility and rely on the market mechanism to correct its own excesses. The idea that prices, although they may take random walks, tend to revert to the mean served as the guiding principle for the synthetic financial instruments and investment practices which are currently unraveling (Soros, 2008, p.97). In addition, Soros argued that the actual source of the current crisis is the asymmetric structure of financial internationalization and financial liberalization. In this article, we will review the origins of the current global financial crisis. Within this framework it reviews recent developments in global financial atmosphere causing distortion and distrust in financial environment worldwide. In what follows, we therefore attempt to locate the origins of the crisis through two main grouping of 33 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo axis: first financial liberalization, competition, excessive risk taking and excessive leverage and second financial innovation, complex corporate structures and lack of adequate supervision. Financial Liberalization, Competition, Excessive Risk Taking and Excessive Leverage It is not surprising that analysts and observers of the financial markets have brought Minsky‘s ideas back from an almost total intellectual exile. The conditions that caused and then helped to develop the current financial crisis in the USA correspond very neatly to Minsky‘s model of financial crises. This cyclical pattern is the endogenous nature of agents‘ risk perception and expectations. The Minskyan cycle can be described as follows. The tranquillity of states of full-employment gradually leads to a diminishing perception of risks and increasingly optimistic expectations about the future. It is also during periods of tranquil expansion that ‗profit-seeking financial institutions invent and reinvent ‗‗new‘‘ forms of money, substitutes for money in portfolios, and financing techniques for various types of activity‘. As financial innovation and optimistic expectations develop, additional demand for goods and assets is created. Asset prices increase, giving rise to additional profit opportunities and thus attracting new investors. This positive feedback characterises the booming phase of the cycle, in which the greater appetite for risk and new financial instruments make the system increasingly fragile. At some point, some event calls agents‘ attention to the high degree of exposure to risk in the system and a phase of financial distress begins (Minsky, 1986, p.199) In its Annual Report for 2006–7 released in June 2007 (technically not an Financial Stability Report, but covering financial stability concerns as part of its remit), the BIS noted that an ―ever increasing number of economic and financial variables have been observed to deviate significantly from what might be deemed traditional norms‖ which might not be sustainable. They highlighted that the world seems ―awash with liquidity‖ with mortgage credit available on unprecedented terms. Low risk free rates and intense competition were seen as underlying a high appetite for risk, but also the misperception of risk due to lack of due diligence in the originate and distribute model – related in turn to principal-agent problems. Concerns were expressed about ―irrational exuberance‖ and risk of overpricing assets, that might turn to undershooting of prices, if liquidity dries up and correlations of asset prices rise as has been seen ―many times in the past‖(Davis, Karim, 2008). As stated very precisely by Jack Boorman (2009), these trends were further complicated by an increasingly integrated global trading and financial system which magnified and accelerated the transmission process; inadequate regulation and supervision of national financial systems and fragmentation of global regulation; weak surveillance by the IMF and other multilateral organisations; and aggravated by weak and uncoordinated policy responses to the initial signs of trouble in the financial system—responses that, as noted subsequently, in many instances did more to shake confidence than to instill a sense that policy was up to the task of dealing with the banking system crisis and the impact on the real economy (Boorman, 2009). Simultaneously, now powerful financial interests pushed for the deregulation and liberalization of world financial markets. This resulted in intensified financial competition over increased household and firm demand for credit that, in turn, fed a wave of financial innovation (from junk bonds, securitization, collateralized debt obligations to credit default swaps). In Minskian fashion, these developments allowed under-consumption to be temporarily averted and furthered over-investment tendencies that spread to developing economies. Continued macroeconomic growth became dependent on a financially fragile debt structure and on consumption propped up by wealth effects induced by asset bubbles. The bubbles were internally generated by increases in endogenous credit facilitated by financial innovation. These bubbles were allowed to persist by competition-induced decreases in inflation that allowed monetary authorities to pursue lower interest rate policies (Goldstein, 2009). Minsky (1987) was one of the few commentators who understood the true potential of securitization. In principle, all mortgages (indeed, most bank assets) could be packaged into a variety of risk classes, with differential pricing to cover risk. Investors could choose the desired risk-return trade-off. Financial institutions would earn fee income for loan origination, for assessing risk, and for servicing the mortgages. Wall Street would place the collateralized debt obligations (CDOs), slicing and dicing to suit the needs of investors. Securitization contributed to an apparent democratization of access to credit as homeownership rates rose to record levels over the coming decades—and it initially appeared that banks and thrifts were insulated from interest rate risk. Minsky (1987) argued that securitization reflected two additional developments. First, it was part and parcel of the globalization of finance, as securitization creates assets freed from national boundaries. As Minsky was fond of pointing out, the unparalleled post-WWII depression-free expansion in the developed world (and even in much of the developing world) has created a global pool of managed money seeking returns. Packaged securities were appealing for global investors trying to achieve the desired proportion of dollardenominated assets. It would be no surprise to Minsky to find that the value of securitized American mortgages 34 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo eventually exceeded the value of the global market for federal government debt. The second development is the relative decline of the importance of banks in favor of ―markets.‖ (The bank share of all financial assets fell from around 50% in the 1950s to around 25% in the 1990s.) This was encouraged by the experiment in Monetarism (that decimated the regulated portion of the sector in favor of the relatively unregulated ―markets‖), but it was also by continual erosion of the portion of the financial sphere that had been allocated by rules, regulations, and tradition to banks. The growth of competition on both sides of banking business—checkable deposits at nonblank financial institutions that could pay market interest rates; and rise of the commercial paper market that allowed firms to bypass commercial banks—squeezed the profitability of banking. Minsky (1987) observed that banks appear to require a spread of about 450 basis points between interest rates earned on assets less that paid on liabilities. This covers the normal rate of return on capital, plus the required reserve ―tax‖ imposed on banks (reserves are non-earning assets), and the costs of servicing customers. By contrast, financial markets can operate with much lower spreads precisely because they are exempt from required reserve ratios, regulated capital requirements, and much of the costs of relationship banking. To restore profitability in the aftermath of Monetarism, banks and thrifts would earn fee income for loan origination, but by moving the mortgages off their books they could escape reserve and capital requirements. Investment banks purchased and pooled mortgages, then sold securities to investors. As Minsky (1987) argued, investment banks would pay ratings agencies to bless the securities, and hire economists to develop models to demonstrate that interest earnings would more than compensate for risks. Risk raters and economic modelers essentially served as credit enhancers, certifying that prospective defaults on subprimes would be little different from those on conventional mortgages—so that the subprime-backed securities could receive the investment-grade rating required by insurance and pension funds. Later, other ―credit enhancements‖ were added to the securities, such as large penalties for early payment and buy-back guarantees in the event of capital losses due to unexpectedly high delinquencies and foreclosures—the latter became important when the crisis hit because the risks came right back to banks due to the guarantees. But an additional advantage to the banks of all this lay in the regulatory arbitrage that the collateralised debt obligations provided. Banks were able to expand leverage [the relationship of their assets (the amount lent out) to their equity or capital] in ways that were previously impossible. This expansion of leverage was a significant factor in allowing the investment banks and others to achieve greater pricing power in their trading activities, underpinning their bubble-inducing activities. Clearly, any holding of capital is costly to the banks in the sense that it cannot be lent out at an interest. Yet over the recent past the creation of asset-backed securities of the form discussed above allowed the banks to increase their leverage substantially (Lawson, 2009). Commercial banks appeared to be adequately capitalised, but only because they overestimated the value of on-balance-sheet assets while holding a high percentage of their most vulnerable assets hidden off-balance-sheet. In fact, they were excessively leveraged, as the crisis revealed. Many European banks had leverage ratios of 50 or more before the crisis (Crotty, 2009) One particular dimension of the housing bubble were the subprime loans which were repackaged by the finance sector as particular mortgage-backed securities (MBS) and collaterized debt obligations (CDOs)—ostensibly to better manage risk. Thus excess liquidity was channelled both directly into the purchase of increasingly complex financial instruments (including derivative products) and indirectly by allowing the funding of subprime mortgages which were then repackaged as MBSs and CDOs. When the housing bubble burst it became apparent that the value of MBSs and CDOs had not been accurately reflected on banks‘ balance sheets. Financial instruments had become so complicated that where risk lies had become obscured. When the subprime mortgage market collapsed there was widespread contagion into the global financial system as a whole, as a result of the global distribution of the complex financial instruments and derivative products amongst the globally interconnected financial firms. The ‗toxic‘ combination of an asset price bubble and the way the risks were passed on into the system has been key to making these financial instruments into such financial weapons of mass destruction (O‘Brien, Keith, 2009). When losses on subprimes began to exceed expectations based on historical experience, prices of securities began to fall. Problems spread to other markets, including money market mutual funds and commercial paper markets, and banks became reluctant to lend even for short periods. With big leverage ratios, money managers faced huge losses greatly exceeding their capital, and began to de-leverage by selling, putting more downward pressure on prices. As the subprime market unraveled, fears spread to other asset-backed securities, including commercial real estate loans, and to other bond markets such as that for municipal bonds. Markets recognized that there were systemic problems with the credit ratings assigned by the credit ratings agencies. Further, they realized that if mortgage-backed securities, other asset-backed securities, and muni bonds are riskier than previously believed, then the insurers will have greater than expected losses. Ratings agencies downgraded the credit ratings of the insurers. As the financial position of insurers was questioned, the insurance that guaranteed the assets became worthless—so the 35 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo ratings on bonds and securities were downgraded. In many cases, investment banks had a piece of this action, holding the worst of the securities, and they had promised to take back mortgages or had positions in the insurers—in retrospect, a huge mistake. (Wray, 2009) Financial Innovation, Complex Corporate Structures and Lack of Adequate Supervision Although the visible start of the global financial crises emerged from US subprime market, its deep cause on the financial side is to be found in the flawed institutions and practices of the current financial regime, often referred to as the New Financial Architecture (NFA). ‗New Financial Architecture‘ refers to the integration of modern day financial markets with the era‘s light government regulation. The NFA is based on light regulation of commercial banks, even lighter regulation of investment banks and little, if any, regulation of the ‗shadow banking system‘—hedge and private equity funds and bank-created Special Investment Vehicles (SIVs). Support for lax regulation was reinforced by the central claim of neoclassical financial economics that capital markets price securities correctly with respect to expected risk and return. Reregulation of financial markets will not be effective unless it substantially reduces the perverse incentives that pervade the system. Financial innovation has proceeded to the point where important structured financial products are so complex that they are inherently non-transparent. They cannot be priced correctly, are not sold on markets and are illiquid. According to the Securities Industry and Financial Markets Association (SIFMA), there was $7.4 trillion worth of Mortgage Backed Securities (MBSs) outstanding in the first quarter of 2008, more than double the amount outstanding in 2001. Over $500 billion dollars in Colletarized Debt Obligation (CDOs)1 were issued in both 2006 and 2007, up from $157 billion as recently as 2004 (SIFMA website). The explosion of these securities created large profits at giant financial institutions, but also destroyed the transparency necessary for any semblance of market efficiency. Deregulation allowed financial conglomerates to become so large and complex that neither insiders nor outsiders could accurately evaluate their risk. The Bank for International Settlement told national regulators to allow banks to evaluate their own risk—and thus set their own capital requirements—through a statistical exercise based on historical data called Value at Risk (VAR). Government officials thus ceded to banks, as they had to ratings agencies, crucial aspects of regulatory power (Crotty, 2009) The surge in non-prime mortgage loans was spurred by the confidence of originating banks in their ability to measure default risk accurately by employing standard quantitative models. The risk associated with these underlying securities was subsequently transferred to market investors in the form of residential mortgage-backed securities (RMBS) and their common derivatives such as collateralized debt obligations (CDOs). These complex financial instruments have been differentiated by their riskiness and sold to market investors. They have allowed investors to choose assets with a precise risk profile (Orlowski, 2008, p.11). But the most important factors which contributed to the crisis appearance were the financial innovations (represented by the securitization activity and the credit derivatives), combined with the imperfections of the regulatory and surveillance activities (Albulescu, 2008). Leverage can therefore constitute an effective long-term strategy to increase the value of a portfolio, since it basically entails getting loans with the hope that investment returns will be higher than borrowing costs. But if the economic return on investment is lower than borrowing costs, leverage becomes harmful. It then creates a snowball effect on the balance sheet. In the final analysis and simply put, leveraging is a risk transfer instrument; it is a sword of Damocles with the potential to hurt the risk-taking firm. In the event of bad investment, corporate equity, which normally acts like a safety feature for most firms, becomes useless. In such situations, the only way out is either a buyout by another firm in better financial standing or government intervention or bankruptcy. When used excessively, leveraging can threaten, via domino effect, the stability of a whole sector or industry. That is what happened on Wall Street in September 2008 when Lehman Brothers went bankrupt. Many investors had engaged in leveraging with the goal of boosting rapidly the growth rate of their portfolios. The inaction of regulation agencies and independent rating agencies—that had yielded to the illusions of the effectiveness of monetary policy— 1 In their abbreviated definition, CDOs are structured credit products backed by pools of other assets, with cash flows assigned to varying credit risk tranches: senior AAA-rated, mezzanine AA to BB- rated, and equity (unrated) tranche. Cash flows are going first to the lowest risk tranche. In Exchange for purchasing CDOs, third-party investors receive a claim on the mortgage asset and related cash flows, which becomes collateral in the case of default. Forms of CDOs include: a cash flow CDO where underlying credit risks are bonds or loans held by the issuer, a synthetic CDO with the exposure to risk insured by the credit default swap (CDS), and CDOs-squared where each underlying risk is itself a CDO tranche. 36 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo encouraged the spectacular development of new, complex and minimally regulated financial products. The intensive recourse to increasingly sophisticated innovations as well as the dissemination of financial instruments which with time became incomprehensible to users – including workers of the regulation and rating agencies - cost the international financial system what was supposed to be its most important or precious asset: transparency (Monga, 2009, p.13). Looking at the causes of the global crisis from supervisory and regulatory perspectives, The Basel Committee itself has already indicated, through its Chairman Nout Wellink, that a thorough revision of the risk management and capital adequacy regulations is needed. The Basel committee already proposed raising capital requirements for complex structured credit products, liquidity facilities to support asset-backed commercial paper conduits and credit exposures held due to trading. Additionally, the committee said that standards for liquidity management needed to be strengthened. Another problem about the causes of the crisis is the procyclicality of the capital requirements, which has to be addressed by the Basel Committee. It is evident that the capital requirements should become more anti-cyclical. The risk management models based on Basel II have not passed the stress test of the credit crisis. This was to be expected, as ex post risk (certainly in times of crisis) is not a good proxy for ex ante uncertainty. Several researchers have additionally proposed improvements for risk management and capital planning to make banks more resilient to crises. It has become clear that national central banks and financial supervisors have to be much more involved with risk management in financial institutions. We have seen that CEOs do not understand the risk management models and aim for higher yields and the risks connected to those yields. Regulators have to provide incentives for banks to take into account risks better when searching for higher yields. This does not necessarily have to come from more strict supervision. Because of their strategic interaction with financial institutions, supervisors should use modern game-theoretic concepts like constructive ambiguity and incentive compatibility to realise smarter and more efficient supervision. The credit crisis has showed us that the American system of financial supervision has failed and that the European supervision of banks and insurers also needs significant improvement (Eijffinger, 2008). At the most basic level, the subprime crisis resulted from the tendency of financial normalization and innovation to run ahead of financial regulation. For a long time, deregulation was the order of the day not only outside but also within financial markets, as illustrated by, for example, eliminating the Glass-Steagall Act‘s2 restrictions on mixing investment and commercial banking. However, considering what had happened, the problem was that other (regulatory) policies were not adapted to the new environment (Schneider, Kirchgässner, 2009) In the developed world there has been a long-term transition away from relatively tightly regulated banking toward ―market-based‖ financial institutions. This transformation is most clear in the U.S., which had separated commercial banking (loans and deposits) from investment banking (broader array of financial instruments including equities and securities). Two decades ago there was a lot of discussion of the benefits of the ―universal banking‖ model adopted abroad (Germany, Japan), and there was some movement in the U.S. in that direction. However, of far greater importance was the development of the ―originate to distribute‖ model best represented by securitization, and use of ―off-balance sheet‖ operations. Ironically, the push to increase safety and soundness through creation of international standards as adopted in the Basle agreements actually encouraged these developments—which as we now know greatly increased systemic risk. The failure of private parties to exercise sufficient due diligence was rooted in the failure of government supervisors to challenge decisions made by private accountants and credit-rating organizations. Authorities neglected their duty of examining and publicizing the implications that these decisions might have for safety-net loss exposure. By tolerating a decline in transparency, supervisors made it difficult to recognize and price the risk expansion not only for themselves, but also for the market participants (Caprio, Demirgüç-Kunt and Kane, 2008). The current crisis just as convincingly represents a failure of the Big Government/Neoconservative (or, outside the U.S., what is called neo-liberal) model that promotes deregulation, reduced supervision and oversight, privatization, and consolidation of market power. It replaced the New Deal reforms with self-supervision of markets, with greater reliance on ―personal responsibility‖ as safety nets were shredded, and with monetary and fiscal policy 2 The Banking Act of 1933 was a law that established the Federal Deposit Insurance Corporation (FDIC) in the United States and introduced banking reforms, some of which were designed to control speculation[1]. It is most commonly known as the Glass– Steagall Act, after its legislative sponsors, Carter Glass and Henry B. Steagall. The first Glass-Steagall Act of 1932 was enacted in an effort to stop deflation, and expanded the Federal Reserve's ability to offer rediscounts on more types of assets, such as government bonds as well as commercial paper[4]. The second Glass–Steagall Act (the Banking Act of 1933) was a reaction to the collapse of a large portion of the American commercial banking system in early 1933. It introduced the separation of bank types according to their business (commercial and investment banking), and it founded the Federal Deposit Insurance Corporation for insuring bank deposits. Literature in economics usually refers to this latter act simply as the Glass–Steagall Act, since it had a stronger impact on US banking regulation. (www.wikipedia.org) 37 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo that is biased against maintenance of full employment and adequate growth to generate rising living standards for most Americans (Wray, 2009). One important implication of the recent crisis is the wide-spread calls for reforms of regulation and supervision. The initial reaction to the emerging crisis was one of disbelief: how could the crisis emerge in countries whose supervision of credit risk had been thought to be the best in the world? Indeed, the regulatory standards and protocols of these countries were in the process of being emulated worldwide through the international Basel capital accords. Basel II – which is currently in its implementation stage - grew out of concern that the Basel I accord was unable to address the range of risks in bank activities, as evidenced by the growth of securitization. Basel II is built on three Pillars: (1) minimum regulatory capital requirements for credit risk, operational risk and market risk; (2) the supervisory review process; and (3) market discipline and disclosure. The minimum capital requirements are determined by either external ratings from ratings agencies for smaller banks or by outputs from the larger banks‘ own internal ratings models. Many interpreted the crisis as a vivid example of market failure, evidence that there is no such thing as market discipline, reinforcing calls for stronger regulations through improvements in Basel II accord. But the crisis also spawned a growing argument about the role Basel I accord may have played in causing the crisis. Indeed, it is no secret that Basel I contributed to the growth in securitization by assigning lower capital charges and thus giving incentives to institutions to move their assets into off balance- sheet securitization vehicles. While advocates claimed that Basel II, had it been implemented earlier, could have lessened or prevented the turmoil, critics of the Basel approach to capital regulation pointed out that the crisis has simply reconfirmed fundamental flaws that have been evident in this approach (Demirgüç-Kunt, Servén, 2009, p.25). Possible solutions to overcome the worldwide distress After leaving out the first shock, countries started to search about possible ways to overcome the crisis with least damage and the least cost in the shortest period of time possible. Though fundamental precautions needs to be taken worldwide, nations and authorities have started the job by listing the lessons learned from the crisis and by putting forward relative actions according to problematic areas and issues in financial environment along with the whole economy as well. In the United States, policy proposals to change specific regulations as well as the structure of regulation and supervision at both the domestic and international levels have been coming forth through the legislative process, from the Administration, and from recommendations by international organizations such as the IMF, Bank for International Settlements, and Financial Stability Board (Forum) (Nanto, 2009). Though remedies prepared by countries differs according to every nation due to different focus over the problems and different national financial structures and different needs, fundamentally policies commonly aim to promote robust supervision and regulation of financial firms, establish comprehensive supervision of financial markets, protect consumers and investors from financial abuse, provide the government with the tools it needs to manage financial crises, and to raise international regulatory standards and improve international cooperation. In addition, U.S. authorities proposed international reforms to support U.S. efforts- where policy work is the most intense as the starting point of the crisis and as the most affected country of the crisis, including strengthening the capital framework; improving oversight of global financial markets; coordinating supervision of internationally active firms; and enhancing crisis management tools. As the crisis unfolded, governments have been forced into the role of becoming new owners of distressed financial institutions, guarantors of loans, taking over the risk implicit in poor collateral (with contingent liabilities for the taxpayer), and making regulatory adjustments on the run. With respect to crisis management there are three basic and separable steps required to deal with a banking system solvency crisis. Guarantee liabilities to stop bank runs. All deposits need to be covered to avoid creating runs between covered and noncovered institutions. Secondly, separate the good assets from the bad assets, and get the bad assets off bank balance sheets. One approach to this is like the Troubled Asset Relief Program (TARP) program in its initial form: essentially an ‗asset management‘ approach to buying toxic assets (as was used during the Asia crisis). Thirdly, recapitalize the asset-cleansed banks by finding new equity holders. This can be via selling common shares or preference shares (that provide a higher yield to the owner) to private entities or the government. The latter is not desirable in the longer run, as it can contribute to moral hazard issues and level playing field issues. As the crisis passes, it will be important to focus on sustainable policies for the financial system (Blundell-Wignall, Atkinson and Lee, 2008). Most important, according to Ergungor and Thomson, is that successful crisis resolutions have been characterized by transparency. When officials move to contain a financial crisis, their primary task is to identify which institutions are viable and which assets are good, and conversely which institutions are insolvent and which assets are bad. This triage and full disclosure of associated losses clears the uncertainty surrounding the 38 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo financial institutions and makes it possible for the viable institutions to raise new funds from private investors or from the government if private sources are not available. Second, crisis resolutions have been most successful when they were handled by a politically and financially independent agency. Granting independence to those responsible for containing the crisis and restructuring shields decision makers from political pressures, which mount as institutions are closed and assets are liquidated. The decision to close a financial institution or a business must be an economic, not a political, one. Financial independence is necessary to give credibility to political independence: If a government agency holds the purse strings, it can dictate policy. Independence from changing political environments is also important because it allows for a rapid response to emergent funding needs (as when new losses are discovered in a financial institution). Having to wait for the legislature to appropriate funds in these situations can be impractical. A third practice associated with a successful resolution strategy is the maintenance of market discipline. Without it, note Ergungor and Thomson, the stage is set for future crises. If market discipline is to be effective, investors who assumed greater risks must be credibly exposed to loss; that is, they must suffer the consequences of having ignored or failed to detect signs of trouble. Finally, Ergungor and Thomson observe that containing troubled financial assets and restructuring institutions has typically not been enough to resolve a financial crisis entirely, though doing so positions the system to return to more normal functioning. They find that full crisis resolution must also achieve some restoration of credit flows within the economy. For that to happen, the creditworthiness of borrowers must be restored throughout the economy—a difficult task, given that the economic fallout from a crisis (such as rising unemployment) actually erodes credit quality further. (Ergungor, 2007; Ergungor and Thomson, 2005; Ergungor and Cherny, 2009) Conclusion The subprime mortgage crisis that erupted in the American financial markets in August 2007 caused an unprecedented global recession and generated various and urgent policy responses around the world. It was seen as an opportunity for some communist economists to announce the end of the dominance of free market economy. It was, however, a matter of concern to hear some important people complain about the ―betrayal of globalization‖-who have by and large managed their economies much better in the past twenty years, only to be hit hard by a crisis that originated in the center of the world economy. Financial crises often do expose weaknesses in the underlying incentive frameworks and the regulation and supervision systems that are supposed to reinforce them. But finance is risky business and it is naïve to think that regulation and supervision can – or should- completely eliminate the risk of crises, although they can make crises less frequent and less costly. Neither monetary policy nor capital controls can substitute for well designed prudential regulation. Despite their inherent fragility, financial systems underpin economic development. The challenge of financial sector policies is to align private incentives with public interest without taxing or subsidizing private risktaking. Public ownership or too aggressive regulation would simply hamper financial development and growth. But striking this balance is becoming increasingly complex in an ever more integrated and globalized financial system (Demirgüç-Kunt, Servén, 2009). How did this second great colossal muddle arise? In the aftermath of the Great Depression, we redesigned the machine so that we did understand it, well enough at any rate to avoid big disasters. Banks, the piece of the system that malfunctioned so badly in the 1930s, were placed under tight regulation and supported by a strong safety net. Meanwhile, international movements of capital, which played a disruptive role in the 1930s, were also limited. The financial system became a little boring but much safer. Then things got interesting and dangerous again. Growing international capital flows set the stage for devastating currency crises in the 1990s and for a globalized financial crisis in 2008. The growth of the shadow banking system, without any corresponding extension of regulation, set the stage for latter-day bank runs on a massive scale. These runs involved frantic mouse clicks rather than frantic mobs outside locked bank doors, but they were no less devastating. What we're going to have to do, clearly, is relearn the lessons our grandfathers were taught by the Great Depression. I won't try to lay out the details of a new regulatory regime, but the basic principle should be clear: anything that has to be rescued during a financial crisis, because it plays an essential role in the financial mechanism, should be regulated when there isn't a crisis so that it doesn't take excessive risks. Since the 1930s commercial banks have been required to have adequate capital, hold reserves of liquid assets that can be quickly converted into cash, and limit the types of investments they make, all in return for federal guarantees when things go wrong. Now that we've seen a wide range of non-bank institutions create what amounts to a banking crisis, comparable regulation has to be extended to a much larger part of the system. We're also going to have to think hard about how to deal with financial globalization. In the aftermath of the Asian crisis of the 1990s, there were some calls for long-term restrictions on international capital flows, not just temporary controls in times of crisis. For the most part these calls were rejected in favor of a strategy of building up 39 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo large foreign exchange reserves that were supposed to stave off future crises. Now it seems that this strategy didn't work. Exactly what form the next response should take isn't clear, but financial globalization has definitely turned out to be even more dangerous than we realized. (Krugman, 2009, p. 189) The World economy faces with financial crises in certain periods. From time to time those crises become more frequent and from time to time they become seldomly occurring. But we should note that just like the severity and intension of the earthquakes increases when the earthquakes are rare, the damage and cost of the financial crises to the economy increases if it has been a long time after the last event hit the world. Following the financial turmoil of 2007-2008 of which the negative effects still continue, there have been thousands of lessons taken out of the crises. All the lectures are about the policies to overcome the crises and the measures to take in order to prevent the new ones. But since the financial products, financial institutions and financial environment changes rapidly, every new crisis comes up with an unanticipated source. So every time there remains new lessons to learn for the economy. References Albulescu, Claudiu Tiberiu (2008); The Spread of the Capital Market‘s Global Crisis: Does The Countries‘ Industrial Profile Matter?, Journal of Applied Economic Sciences Issue 4 (6)/Volume III /Winter 2008 Basu, Kaushik (2009), A Simple Model of the Financial Crisis of 2007-9 with Implications for the Design of a Stimulus Package, conference on the Micro foundations of Development at the London School of Economics, May 30, 2009; CAE Working Paper #09-11 BIS, 79th Annual Report, (2009) Blundell-Wignall, Adrian; Atkinson, Paul and Lee, Se Hoon (2008), The Current Financial Crisis: Causes and Policy Issues, Financial Market Trends © OECD 2008 Boorman, Jack, (2009), Remarks for the South Asia Forum on the Global Economic and Financial Crisis, Manila, Philippines, March Caprio,G., Demirgüç-Kunt, Aslı and Kane, Edward,(2008), The 2007 Meltdown in Structured Securitization: Searching for Lessons not Scapegoats, Policy Research World Bank Working Paper, # 4756 Crotty, James (2009), Structural causes of the global financial crisis: a critical assessment of the ‗new financial architecture‘, Cambridge Journal of Economics 33, p. 563–580 Davis, E. Philip; Karim, Dilruba (2008), Could Early Warning Systems Have Helped To Predict the Sub-Prime Crisis? National Institute Economic Review 206; 35 Demirgüç-Kunt, Aslı; Servén, Luis (2009), Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro and Financial Policies, Policy Research Working Paper, # 4807 the World Bank. EEAG European Economic Advisory Group at CESifo, 2009, Report on European Economy 2009, www.cesifo-group.de, Access date: 07.05.2010 Eijffinger, Sylvester C.W. (2008), Crisis management in the European Union, Policy Insight No.27, Centre for Economic Policy Research, December Ergungor, O. Emre (2007), On the Resolution of Financial Crises: The Swedish Experience, Policy Discussion Papers, no 21, Federal Reserve Bank of Cleveland Ergungor, O. Emre and Thomson, James B. (2005), Systemic Banking Crises, Policy Discussion Papers, no: 9 Federal Reserve Bank of Cleveland Ergungor, O. Emre; Cherny, Kent, (2009), Effective Practices in Crisis Resolution and the Case of Sweden, Economic Commentary February, Federal Reserve Bank of Cleveland. Gills,B.(2008), The Swinging of the Pendulum: the Global Crisis and Beyond, Globalizations, vol.5, no. 4, p.13–22 Goldstein, Jonathan P. (2009) , Heterodox Crisis Theory and the Current Global Financial Crisis, Review of Radical Political Economics; 41; Book Review Essays, p. 560-569 40 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Krugman, Paul, (2009), The Return of Depression Economics and the Crisis of 2008, New York, W. W. Norton & Company, Inc. Lawson, Tony (2009), The Current Economic Crisis: Its Nature and the Course of Academic Economics, Cambridge Journal of Economics 33, p. 759–777 Minsky, H. (1986), Stabilizing an Unstable Economy, New Haven, CT, Yale University Press Minsky, Hyman P. (1987), ―Securitization,‖ Handout Econ 335A, Fall 1987, mimeo, in the Minsky Archive at The Levy Economics Institute of Bard College Monga, Celestin (2009), Post-Macroeconomics Reflections on the Crisis and Strategic Directions Ahead, World Bank Policy Research Working Paper, # 4986. Morgan, Jamie (2009), The limits of central bank policy: economic crisis and the challenge of effective Solutions, Cambridge Journal of Economics, 33, p.581–608 Nanto, Dick K.(2009), The Global Financial Crisis: Analysis and Policy Implications, Report for Congress, Congressional Research Service O‘Brien, Richard and Keith, Alasdair (2009), The geography of finance: after the storm, Cambridge Journal of Regions, Economy and Society , 2, p. 245–265 Orlowski, Lucjan T. (2008), Stages of the Ongoing Global Financial Crisis: Is There a Wandering Asset Bubble?, Halle Institute for Economic Research Discussion Paper, No.11 Pettifor, A. (2006), The Coming First World Debt Crisis, London, Palgrave Schneider, Friedrich; Kirchgässner, Gebhard (2009), Financial and world economic crisis: What did economists contribute? Public Choice 140: p. 319–327 Soros, George, (2008), The New Paradigm for Financial Markets, The Credit Crisis of 2008 and What It Means, BBS Public Affairs, NY Wray, L. Randall (2009), Money Manager Capitalism and the Global Financial Crisis, The Levy Economics Institute of Bard College Working Paper, No: 578, New York 41 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 154 Title A name given to the resource Managerial and Supervisory Mistakes Leading to Foreseeable Consequence: Global Financial Crisis Author Author KURNAZ, Niyazi TOPAL, Hanife KAYIK, Mustafa ÖZKAN, Harika Abstract A summary of the resource. The global financial crisis that began in summer 2007, deepened in 2008 and looks set to run for some time and to have profound effects on the global economy. For the 2007 subprime crisis, we consider that there are also some particular aspects which characterize the actual crisis, like the increased role of financial innovations (the securitization and credit derivatives) and a very important contagion phenomenon which began within the American economy and spread over the global financial markets. The subprime crisis extended at international level, following four main directions: at the root of the crisis lies a fundamental inconsistency between financial globalization – the process of liberalization and deregulation driving the impressive growth of world financial markets – and existing public rules and policies at both domestic and international levels. On the other hand; complex corporate structures managing financial innovation causing excessive risk taking and excessive leverage due to lack of adequate supervision enhanced the global disease. In this paper after discussing the causes of the global financial crisis, we will put forward ways and policies to overcome the ongoing crisis in global level. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/0c177b35f83c9c542fc2514d3ef22fc6.pdf 4ff23257dd5e83045424fbe9e87b7c2c PDF Text Text The Sustainability of Agricultural Activities and its Effects on Internal Waters And Living Areas Hasan Kalyoncu Süleyman Demirel University, Faculty of Science Art, Department of Biology, Isparta, Türkiye. Ismail Hakkı Kalyoncu Selcuk University, Faculty of Agriculture, Department of Garden Plants, Konya, Türkiye. Abstract:Residues of some medicals and fertilizers used in agricultural areas can reach to some receptors through some processes such as irrigation and surface waters. These natural receptors are rivers, lakes and seas. The materials coming from agricultural areas have more destructive effects on the lakes and rivers since these are smaller. The most pronounced pollutants coming from agricultural areas to rivers and lakes are pesticides and fertilizers which are known as a source of nitrogen and phosphor. Chemicals in some areas where pesticide were used are mixed into rivers and lakes through that way they reach to water habitats and organisms. On the other hand, this causes to increase organic ratio, eutrophication and for ecological balance to be destroyed. Pathogens are transmitted to surface waters with human and animal wastes and then these contaminated surface waters threat human health. An important amount of pathogens is distributed to receptors through use of wastewaters for irrigation. In order to this negative effects to be removed, in order to save rivers and lakes, wild irrigation must be stopped, the direct approach of wastewaters into the rivers and lakes must be prevented, the usage of fertilizers and pesticides must be controlled, mechanical and biological war must be strengthen. The sustainable ecological living areas can be constructed by taking the water sources and biological kinds under control with these precautions. Introduction Some reasons, such that the environment knowledge of population has not been well developed, the world population has increased very fast, and the industry and technology have developed too fast, cause that the drinking water is decreased in time. Beside these, pollution of water sources irresponsibly will cause problems can not be solved (Haviland, 2002; Dağlı, 2005; Akın, 2007 ). Increasing demand on the food with increasing population makes that the quality and quantity must be increased. As a result of these demand, the usage of fertilizer and pesticide are increased in time (Huber et al., 2000; Causape et al., 2004). The chemicals used agricultural areas are classified in two groups to be fertilizers and pesticides (Alloway, 1995). They are very important issue since they are toxic, decomposition of them is very difficult, and they can be deposited in living organisms and environment (Egemen, 2006). Pesticides and chemical fertilizers are mixed into rivers which are one of the ecosystems mostly affected from environmental pollution (Huber et al., 2000, Causape et al., 2004; Taş, 2006 ). The pollutions caused by agricultural activities are firstly transferred into the rivers and then goes to lakes and seas throughout rivers. It can prevent the development of zoo and phytoplankton which have an important place on the feeding chain of aquatic livings even in the case of the existence of pesticides in trace level in the water (Aguilar et al., 1997). This pollution is badly affecting not only livings living in pollution but also it can reach human through feeding chain (Yılmaz, 2004). It is important to note that the determination of existence of DDT (pesticide) on the penguins, seal and people living in poles where no pesticides have never been used shows the power of circulation of chemicals used in agriculture over the world (Egemen, 2006). The harms given by the improper usage with the increase of this improper usage of pesticides and chemical fertilizers will reach to so high level (Öztürk and Tosun, 2004). At present, as the production and usage of pesticides and chemical fertilizers continue to increase, in order to the health and environmental problems the 641 �production to be decreased, this case must seriously be taken under control (Atasoy and Rastgeldi, 2006). Agricultural Activities And Pesticide Since pesticides remain in nature for so long time without decomposition, they have no selectivity on the selected organisms and collected in some parts of food chain, they can cause destructions of some beneficial kinds and ecological balance and appearing of new kinds presenting resistance to these kind of products (Kambur et al., 2005). It has been well known that pesticides can reach ecosystem of water in several ways. For example, some several medicines can contaminate into water with direct application of pesticides to the buggies during fighting against wild grass in or around the canals of drainage and irrigation or vector insects such as mosquitoes. The medicines in some places where pesticides were used several pesticides reaches to aquatic plants and insects in a way of mixturing these pesticides to river or ground water by rain water. The pesticides mixture into ground or surface waters have limit values for livings according to some structural properties presented in some receptors. The concentrations exceeding these limit values badly effect the life of livings. The first step of bioconsantration mechanisms in aquatic systems is consisted of plankton. An important part of plankton in aquatic habitats consists of algae. Since algae are primary producer, they play a functional role in habitats on which algae exist. Algae which are primary produces in aquatic environment form the base of organic production and they are quite sensitive organisms for physical and chemical changes in an environment where they exist. Algae are key targets for pesticide contaminations since they haw echophysiological similarities (Kambur et al., 2005). The primary production presented by algae forms foundations of whole organic production in aquatic environment. Algae forming the first circle of chain of feeding in waters are organisms which are quite sensitive to the physical and chemical changes in environment where they exist (Round, 1984; Hutchinson, 1967). Sensitivity of algae, which is an important group in either plankton or benthic organisms in fresh water, to different toxic materials is different. Algae have an important role in determination and improvement of water quality and in rehabilitation of waste water. On the other hand, algae remove some elements such as nitrogen and phosphors, existing in quite large amount in aquatic environment, from environment using them as materials of feeding. Because of this, a change in quality and quantity of algae which is primary produces in aquatic environment cause a whole ecosystem to be destroyed (Turan, 2008). It has been understood that fishes are harmfully affected from the low level residues of several pesticides mixed into water in several ways and attitudes of fishes are changed. It has also been reported that babies of some kind of fishes are too sensitive to pesticides. The residues of pesticides even in minimal level, in stagnant waters uses up oxygen in water and destroy the feeding environment for fishes (Anonymous, 2004). The organisms dead by the effects of pesticides are deposited in the bottom of the water by sinking. CO2 or poison gases raised during the decay prevent aquatic organisms coming near to these areas (Anonymous, 2004). Pesticides transferred to aquatic ecosystems presents some different effects on organisms in receptor environments. These effects cause death of fishes, other vertebrates and in invertebrates and algae to be harmed, and also cause disappear from environment. In addition to this, pesticide residues cause chronic toxicity to be developed by food chain and drinking contaminated water (Turan, 2008). As a result of this, biological variety in ecosystems has been affected. Some increases in the pollutants cause some organisms to be increased too much while cause some organisms to be removed from environment or to be annihilated. Some types can only be left which can tolerate pollution. Some damages, which cannot be reversed, appear as a result of destruction of the ecological balance (Kalyoncu et al., 2009). The gills of fishes first met pesticides and, therefore, the most series damages are taken place on that organ (Heath, 1987). On the other hand, it has some harmful effects on haematology depending on kind of fishes (Shakoori et al., 1991; 1996; Atamanalp and Güneş, 2002a; Atamanalp and Güneş, 2002b; Atamanalp and Cengiz, 2002; Atamanalp and Yanık, 2003). The specimens taken from liver have shown that some histopatological effects beside some changes on the colour and size (Atamanalp et al., 2002). The osmoregulation event which is very important event in either sea or fresh water fishes are badly affected by changes of permeability of the gills and skin (Heath, 1987). Attitudes of fishes exposed to chemicals present some differentiations from others. Especially some changes on the some staminal attitudes, such as feeding and adaptation, may cause the fish to loss health. The problems on the neural system appear to be problems on the central neural system as well as problems on the working systems of receptors (Heath, 1987). Pollutants have different effects in the each of different stages of pregnancy biology depending on the groups belonging to, active material contained, concentration and kind of fishes (Çelikkale, 1991; Heath, 1987; Dhawan and Kaur, 1996; Holcombe et al., 1976). It is well known that the s-triazine compounds, which comprise Atrazine and Terbuthylazine, are usually termed recalcitrant, and especially the first one, due to its asymmetric substituent groups, is particularly resistant to biodegradation (Varghaa et al. 2005). These two chemicals are furthermore 642 �herbicides which affects the photosynthetic electronic transport, inhibiting the algal growth in aquatic environment (Eullaffroy and Vernet, 2003), the primary level of the food web. In addition Atrazine even at low exposure concentrations (5µg l-1) affected significantly aquatic organisms (Steinbergi et al., 1995). Agricultural Activities And Chemical Fertilizers When we have looked the harmful effects of fertilizers on environment, it has been thought that mostly nitrogen and phosphors containing fertilizers have given harm on the environment; especially it is well known that it causes the water quality in the watery areas are destroyed as a result of that nitrogen and phosphors containing pollutant are transferred into rivers in anyway and then it also causes eutrophication with increases on the amount of nitrogen and phosphors (Ceran, 2001). The amount of nitrate mixed into drinking water and rivers through washing out process are increased as a result of usage fertilizers containing nitrogen in high level (Sencar et al., 1993). The compounds containing nitrogen has several effects in the view of water pollution, and the most harmful effect is known to be that of changing oxygen compositions, eutrophication, hygiene on the obtaining of drinking water and toxicity problems (Uslu and Türkmen, 1987). Approach of phosphor to surface water causes some undesirable effects in aquatic systems as a result of increase in the primary production. Too much increase in green plants and algae in some rich parts in oxygen of water (eutrophication), increase in the blurrily of water, increase in the light input of aquatic macrophytes, not enough oxygen and an increase of amount of some death of plants in the bottom of the water starts anaerobic conditions and reduces the quality of the water are the most important factors on the reduction of the water quality (Muslu, 1985). Phosphor components broken up into orthophosphate by aquatic plants are important compositions of food materials. If too much phosphor is loaded, pH value of water and tampon systems are changed (Muslu, 1985). A layer on the water is produced by decreasing surface tension of the water. This layer reduces the transmission of light and oxygen transfer and effect biological activities destructively (Akman et al., 2000). The load of nitrogen and phosphor existing in the environment put pressure on the aquatic ecosystems. Although phosphor has some feeding properties for algae, the extremely high existence in the environment cause some algae to be removed from environment and some of them to be destroyed. This also results with extremely development of taxa tolerating the increase of feeding salts. This change taken place in aquatic ecosystem is not only effective on algae but also destructively affects other living groups (Kalyoncu et al., 2009). Results And Suggestions The use of chemical fertilizers and pesticides unplanned and in extremely high amount in agricultural areas effect destruct on all ecosystems. Some cases must be considered before the usage of chemical fertilizers and pesticides in order to completely prevention or minimization of the destructive effects. - It must be note that the pesticides used in agriculture must be easily separable in nature. Beside this, biological fighting methods must be taken over instead of pesticides produced synthetically. - If applications of pesticide are un-exceptionally necessary, farmers must be educated and trained to apply enough and to avoid over use. The technical and sustainable production with plants, which is more economical and suitable for ecosystems, must be carried out for especially in areas near basins and sources of water. -It is well known due to the human health and environment that the chemical fertilizers and pesticides used in agricultural areas are important source of pollutants and reaches to aquatic system with surface water. In order to types of kinds in the aquatic systems to be protected, attention must be applied for application of them in suitable time and dose. The effects of chemical components applied on the aquatic ecosystems must be studied and sustainable control must be carried out. - The ecological agriculture together with advanced agricultural techniques must be applied. Technical and environmentalist agriculture must be carried out for ecological balance to be saved. Some types suitable against diseases and for dried climate must be produced and mechanical and biological techniques for pest management must be developed and then made suggested for common use. - Instead of too much water, enough water applications must be desired, wild and surface irrigations must be left. System must be turned to pressurized irrigation, irrigation time for plants must be determined. Irrigation policies must be put into the agricultural irrigation programs of governments. - On the other hand, system must be changed from opened system to closed systems. The usage of water and fertilizer applied by farmers must be planned, controlled and sustainable. 643 �- Refinery system for wastewater must be constructed legally in cities. Water and wastewater must be transmitted through different waterworks and leakages from the system must be minimized. Purified water must be used in green areas and urban agricultural areas. - Especially the problem of drainage must be solved by completing the foundation of irrigation. The regulation for price of irrigation must be made in the most suitable manner. Economical and efficient irrigation must be supplied and direct indirect encouragement must be applied. - More advantageous against erosion, desert condition, dried climate, more environmentalists, sustainable advanced agricultural techniques must be applied. - As a result, harmful materials reached to aquatic areas as a result of agricultural activities effects on all of livings from algae to fishes living aquatic areas. The importance of agriculture for humanity is unquestionable. But, the aquatic systems are as important as agricultural areas. The chemicals reaching to aquatic areas coming from agricultural areas returns back to people with usage and drinking waters and causes series destructive effects in health. The fresh and clean water sources have gained more importance because of the changes on the global climate. The environmental pollution must be stopped by protecting aquatic ecosystems. The ecology must be kept to be sustainable and carefully followed. References Akman,Y., Ketenoğlu, O., Evren, H., Kurt, L., Düzenli, S., (2000). Çevre Kirliliği (Çevre Biyolojisi). Palme Yayıncılık, Ankara. Akın, G., Akın, M., (2007). Suyun Önemi, Türkiye’de Su Potansiyeli, Su Havzaları Ve Su Kirliliği. Ankara Üniversitesi Dil ve Tarih-Coğrafya Fakültesi Dergisi; 47, 2 ,105-118s. Alloway, B.J., (1995). Heavy Metals in Soils. Blackie Academic & Professional, London. Aguilar, C., Borrull, F., Marce, R. M., (1997). “Determination of Pesticides Đn Environmental Waters by Solid-phase Extraction and Gas Chromatography With Electron-capture and MassSpectrometry Dedection”, Journal of Chromatography, Jan., Vol. 771, pp. 221–231. Anonymous, (2004). Türkiye Çevre Atlası. Çevre ve Orman Bakanlığı, Ankara. Atamanalp, M., Güneş, M., (2002a). Tuzla Çayı’nda (Tercan-Erzincan) yaşayan C. capoeta umbla Heckel, 1843’ nın bazı hematolojik parametreleri (MCV, MCH ve MCHC) üzerine kentsel atıkların etkileri. Ondokuz Mayıs Üniv. Ziraat Fak. Dergisi, 17(3): 5-10. Atamanalp, M., Güneş, M., (2002b). Tuzla Çayı’nda yaşayan C. capoeta’ nın hemoglobin seviyesi, eritrosit ve toplam lökosit sayıları üzerine bir araştırma. Atatürk Üniv. Ziraat Fak. Dergisi, 33(3): 297-300. Atamanalp, M., Cengiz, M., (2002). Bir sentetik piretroit insektisit (cypermethrin)’ in subletal dozlarının Capoeta capoeta capoeta (Güldenstaedt, 1772)’ da hemoglobin, hematokrit ve sediment seviyeleri üzerine etkilerinin belirlenmesi. Ege Üniv. Su Ürünleri Derg. 19 (1-2): 169-175. Atamanalp, M., Keleş, M.S., Haliloğlu, H. Đ., Aras, M. S., (2002). The effects of cypermethrin (a synthetic pyrethroid) on some biochemical parameters (Ca, P, Na and TP) of rainbow trout (Oncorhynchus mykiss). Turk. J. of Vet. Anim. Sci. 26: 1157-1160. Atamanalp, M., Yanık, T., (2003). Alterations in hematological parameters of rainbow trout, (Oncorhynchus mykiss) exposed to mancozeb. Turk. J. Vet. Anim. Sci. 27:1213-1217. Atasoy D., Rastgeldi, C., (2006). Şanlıurfada Pestisit Kullanımı GAP V. Mühendislik Kongresi Bildiriler Kitabı. 26-28 Nisan 2006, Şanlıurfa.1462-1467s. Ceran, Y., (2001). Kimyasal Gübreler ve Sulak Alanlar, Çevre ve Đnsan. T.C. Çevre Bakanlığı Yayın Organı, sayı: 50. 14-19 s. Çelikkale, M. S., (1991). Balık Biyolojisi, Karadeniz Teknik Üniversitesi, Sürmene Deniz Bilimleri ve Teknolojisi Yüksekokulu, Trabzon, s. 250-251. Dağlı, H., (2005). “Đçmesuyu Kalitesi ve Đnsan Sağlığına Etkileri” Bizim Đller. Đller Bankası Aylık Yayın Organı. Sayı 3: 1621s. Dhawan A., Kaur, K., (1996). Toxic effects of synthetic pyrethroids on Cyprinus carpio eggs. Bull. Environ. Contam. Toxicol. 57: 999-1002. 644 �Egemen, Ö., (2006). Çevre ve Su Kirliliği. Ege Üniv., Su ürünleri Fak. Yayınları. No. 42, Đzmir. 120 s. Havıland, William, A., (2002). Kültürel Antropoloji (Çev: Hüsamettin Đnaç, Seda Çiftçi). No: 143. Sosyoloji Serisi: 3. Đstanbul: Kaktüs Yayınları. Heath, A., G., (1987). Water Pollution and Fish Physiology, CRC Press, Boca Raton, Florida, 201-215. Holcombe, G. W., Benoit, D. A., Leonard, E. N., McKim, J. M., (1976). Long-term effects of lead exposure on three generations of brook trout (Salvelinus fontinalis). J. Fish. Res. Bd. Can., 33:1731-1734. Huber, A., Bach, M., Frede, H.G., (2000). Pollution of Surface Waters With Pesticides Đn Source Đnputs. Agriculture, Ecosystems and Environment. 80, 191-204s. Germany: Modeling Non-point Hutchinson, G.E., (1967). A Treatise on Limnology. Vol. Π. John Wiley and Sons. Kalyoncu H., Barlas, M., Ertan, Ö.O., 2009. Aksu Çayı'nın Su Kalitesinin Biotik Đndekslere (Diyatomlara ve Omurgasızlara Göre) ve Fizikokimyasal Parametrelere Göre Đncelenmesi, Organizmaların Su Kalitesi ile Đlişkileri. Türk Bilim Dergisi, 2(1): 46-57. Kumbur, H., Özer, Z., Özsoy, H.D., (2005). Tarım Đlaçlarının (Pestisitlerin) Çevresel Etkileri ve Mersin ili'nde Kullanım Düzeyleri. In: GAP, IV. Tarım Kongresi, 21-23 Eylül 2005, Şanlıurfa, 702-707s. Muslu,Y., (1985). Su Temini ve Çevre Sağlığı. ĐTÜ Matbaası, Cilt III, Đstanbul. Öztürk, Ġ., Tosun, N., (2004). Famoxadone ve Cymoxanil Etkili Maddeli Bir Fungisitin Domates (Lycopersicon esculentum Mill.) Bitkisi Üzerine Fizyolojik Etkisi. Ege Üniv. Ziraat Fak. Derg. 41: 77–87s. Round, F.E., (1984). The Ecology of Algae. Cambridge University Press. Sencar, Ö., Gökmen, S., Yıldırım, A., (1993). Tarımsal Ekoloji. GOP Üni. Ziraat Fak. Ders Notları, Yayın No:l, Tokat. Shakoori, A. R., Iqbal, M. J., Mughal, A. L., Ali, S. S., (1991). Drastic biochemical changes following 48 hours of exposure of Chinese grass carp, Ctenopharyngodon idella, to sublethal doses of mercuric chloride. Proc 1. Symp. Fish & Fisheries, Pakistan.81-98. Shakoori, A. R., Mughal, A. L., Iqbal, M. J., (1996). Effects of sublethal doses of fenvalarate (a synthetic pyrethroid) administered continuously for four weeks on the blood, liver and muscles of a freshwater fish, Ctenopharyngodon idella. Bull. Environ. Contam. Toxicol. 57: 487-494. Steinbergi, C. E. W., Lorenz, R. and Spieser, O. H. (1995). "Effects of Atrazine on Swimming behaviour of Zebrafish, Brachidanio rerio." Water Research 94: 981-985. Taş. B., (2006). Derbent Baraj Gölü (Samsun) Su Kalitesinin Đncelenmesi. Ondokuz Mayıs Üniversitesi, Ordu Fen Edebiyat Fakültesi, Biyoloji Bölümü, 52750, Perşembe-Ordu. 15, 61, 6-15s. Turan Z., (2008). Bazı Pestisitlerin (Dıazınon Ve Dıchlorvos) Scenedesmus Acutus (Meyen) Chodat’ In Gelişimi Üzerindeki Etkilerinin Đncelenmesi. Fırat Üniversitesi Fen Bilimleri Enstitüsü Biyoloji Anabilim Dalı yl., 26s. Uslu, O., Türkman, A., (1987). Su Kirliliği ve Kontrolü (Water Pollution and Control). T.C. Başbakanlık Çevre Genel Müdürlüğü. Eğitim Yayınları Dizisi 1, Đzmir. Yılmaz, F.,( 2004). Mumcular Barajı (Muğla-Bodrum)’nın Fiziko-Kimyasal Özellikleri. Ekoloji, 13, 50: 10-17s. Varghaa, M., Takàtsc, Z. and Màrialigeti, K., (2005). "Degradation of atrazine in a laboratory scale model system with Danube river sediment." Water Research 645 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 612 Title A name given to the resource The Sustainability of Agricultural Activities and its Effects on Internal Waters And Living Areas Author Author Kalyoncu, Hasan Kalyoncu, Ismail Hakkı Abstract A summary of the resource. Residues of some medicals and fertilizers used in agricultural areas can reach to some receptors through some processes such as irrigation and surface waters. These natural receptors are rivers, lakes and seas. The materials coming from agricultural areas have more destructive effects on the lakes and rivers since these are smaller. The most pronounced pollutants coming from agricultural areas to rivers and lakes are pesticides and fertilizers which are known as a source of nitrogen and phosphor. Chemicals in some areas where pesticide were used are mixed into rivers and lakes through that way they reach to water habitats and organisms. On the other hand, this causes to increase organic ratio, eutrophication and for ecological balance to be destroyed. Pathogens are transmitted to surface waters with human and animal wastes and then these contaminated surface waters threat human health. An important amount of pathogens is distributed to receptors through use of wastewaters for irrigation. In order to this negative effects to be removed, in order to save rivers and lakes, wild irrigation must be stopped, the direct approach of wastewaters into the rivers and lakes must be prevented, the usage of fertilizers and pesticides must be controlled, mechanical and biological war must be strengthen. The sustainable ecological living areas can be constructed by taking the water sources and biological kinds under control with these precautions. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed Q Science (General) https://omeka.ibu.edu.ba/files/original/5bfc207aa1595e229a3dedcc4a1e2424.pdf 5fd8c19b0c8b463aee0fe52e336a3ad8 PDF Text Text The Sustainability of Agricultural Activities and Its Effects on Inland Waters and Living Areas Hasan Kalyoncu University of Süleyman Demirel, Faculty of Science & Arts, Department of Biology, Isparta, Turkey hasankalyoncu@gmail.com Đsmail Hakkı Kalyoncu University of Selcuk, Faculty of Agriculture, Department of Horticultural Science, Konya, Turkey kalyon@selcuk.edu.tr Abstract: Residues of some medicals and fertilizers used in agricultural areas can reach to some receptors through some processes such as irrigation and surface waters. These natural receptors are rivers, lakes and seas. The materials coming from agricultural areas have more destructive effects on the lakes and rivers since these are smaller. The most pronounced pollutants coming from agricultural areas to rivers and lakes are pesticides and fertilizers which are known as a source of nitrogen and phosphor. Chemicals in some areas where pesticide were used are mixed into rivers and lakes through that way and reach to water habitats and organisms. On the other hand, this causes to increase organic ratio, eutrophication and for ecological balance to be destroyed. Pathogens are transmitted to surface waters with human and animal wastes and then these contaminated surface waters threat human health. An important amount of pathogens is distributed to receptors through use of wastewaters for irrigation. In order for this negative effects to be removed, in order to save rivers and lakes, wild irrigation must be stopped, the direct approach of wastewaters into the rivers and lakes must be prevented, the use of fertilizers and pesticides must be controlled, mechanical and biological war must be strengthened. The sustainable ecological living areas can be constructed by taking the water sources and biological kinds under control with these precautions. Key words: Agricultural activities, pollution, inland waters, sustainability Introduction Drinking water has been less and less for reasons, such as insufficient environmental awareness, fast increasing world population, excessive development of industry and technology. Beside these, pollution of water sources irresponsibly will cause problems unable to be solved (Haviland, 2002; Dağlı, 2005; Akın, 2007 ). Increasing demand on the food with increasing population makes that the quality and quantity must be increased. As a result of these demand, the usage of fertilizer and pesticide are increased in time (Huber et al., 2000; Causape et al., 2004). The chemicals used agricultural areas are classified in two groups to be fertilizers and pesticides (Alloway, 1995). They are very important issue since they are toxic, decomposition of them is very difficult, and they can be deposited in living organisms and environment (Egemen, 2006). Pesticides and chemical fertilizers are mixed into rivers which are one of the ecosystems mostly affected from environmental pollution (Huber et al., 2000, Causape et al., 2004; Taş, 2006 ). The pollutions caused by agricultural activities are firstly transferred into the rivers and then goes to lakes and seas throughout rivers. It can prevent the development of zoo and phytoplankton which have an important place on the feeding chain of aquatic livings even in the case of the existence of pesticides in trace level in the water (Aguilar et al., 1997). This pollution is badly affecting not only livings living in pollution but also it can reach human through feeding chain (Yılmaz, 2004). It is important to note that the determination of existence of DDT (pesticide) on the penguins, seal and people living in poles where no pesticides have never been used shows the power of circulation of chemicals used in agriculture over the world (Egemen, 2006). The harm given by the improper use with the increase of this improper use of pesticides and chemical 477 �fertilizers will have reached to high levels (Öztürk and Tosun, 2004). The production and use of pesticides and chemical fertilizers continue to in crease at present, and it must be taken under control in order to decrease the health and environmental problems (Atasoy and Rastgeldi, 2006). Agricultural Activities And Pesticide Since pesticides remain in nature for so long time without decomposition, they have no selectivity on the selected organisms and collected in some parts of food chain, they can cause destructions of some beneficial kinds and ecological balance and appearing of new kinds presenting resistance to these kind of products (Kambur et al., 2005). It has been well known that pesticides can reach ecosystem of water in several ways. For example, some several medicines can contaminate into water with direct application of pesticides to the buggies during fighting against wild grass in or around the canals of drainage and irrigation or vector insects such as mosquitoes. Some pesticides reach to aquatic plants and insects through the fact that the medicines in some places where pesticides were used mix into to river or ground water by rain water. The pesticides mixture into ground or surface waters have limit values for livings according to some structural properties presented in some receptors. The concentrations exceeding these limit values badly effect the life of livings. The first step of bio concentration mechanisms in aquatic systems is consisted of plankton. An important part of plankton in aquatic habitats consists of algae. Since algae are primary producer, they play a functional role in habitats on which algae exist. Algae which are primary produces in aquatic environment form the base of organic production and they are quite sensitive organisms for physical and chemical changes in an environment where they exist. Algae are key targets for pesticide contaminations since they haw echo physiological similarities (Kambur et al., 2005). The primary production presented by algae forms foundations of whole organic production in aquatic environment. Algae forming the first circle of chain of feeding in waters are organisms which are quite sensitive to the physical and chemical changes in environment where they exist (Round, 1984; Hutchinson, 1967). Sensitivity of algae, which is an important group in either plankton or benthic organisms in fresh water, is different toxic materials are different. Algae have an important role in determination and improvement of water quality and in rehabilitation of waste water. On the other hand, algae remove some elements such as nitrogen and phosphors, existing in quite large amount in aquatic environment, from environment using them as materials of feeding. Because of this, a change in quality and quantity of algae which is primary produces in aquatic environment cause a whole ecosystem to be destroyed (Turan, 2008). It has been understood that fishes are harmfully affected from the low level residues of several pesticides mixed into water in several ways and attitudes of fishes are changed. It has also been reported that babies of some kind of fishes are too sensitive to pesticides. The residues of pesticides even in minimal level, in stagnant waters uses up oxygen in water and destroy the feeding environment for fishes (Anonymous, 2004). The organisms dead by the effects of pesticides are deposited in the bottom of the water by sinking. CO2 or poison gases raised during the decay prevent aquatic organisms coming near to these areas (Anonymous, 2004). Pesticides transferred to aquatic ecosystems presents some different effects on organisms in receptor environments. These effects cause death of fishes, other vertebrates and in invertebrates and algae to be harmed, and also cause disappear from environment. In addition to this, pesticide residues cause chronic toxicity to be developed by food chain and drinking contaminated water (Turan, 2008). As a result of this, biological variety in ecosystems has been affected. Some increases in the pollutants cause some organisms to be increased too much while cause some organisms to be removed from environment or to be annihilated. Only the types which can tolerate pollution survive. Some damages, which cannot be reversed, appear as a result of destruction of the ecological balance (Kalyoncu et al., 2009). The gills of fishes first met pesticides and, therefore, the most series damages are taken place on that organ (Heath, 1987). On the other hand, it has some harmful effects on haematology depending on kind of fishes (Shakoori et al., 1991; 1996; Atamanalp and Güneş, 2002a; Atamanalp and Güneş, 2002b; Atamanalp and Cengiz, 2002; Atamanalp and Yanık, 2003). The specimens taken from liver have shown that some histopatological effects beside some changes on the colour and size (Atamanalp et al., 2002). The osmoregulation event which is very important event in either sea or fresh water fishes is badly affected by changes of permeability of the gills and skin (Heath, 1987). Attitudes of fishes exposed to chemicals present some differentiations from others. Especially some changes on the some staminal attitudes, such as feeding and adaptation, may cause the fish to loss health. The problems on the neural system appear to be problems on the central neural system as well as problems on the working systems of receptors (Heath, 1987). Pollutants have different effects in the each of different stages of pregnancy biology depending on the groups belonging to, active material contained, concentration and kind of fishes (Çelikkale, 1991; Heath, 1987; Dhawan and Kaur, 1996; Holcombe et al., 1976). It is well known that the s-triazine compounds, which comprise Atrazine and Terbuthylazine, are usually termed recalcitrant, and especially the first one, due to its asymmetric substituent 478 �groups, is particularly resistant to biodegradation (Varghaa et al. 2005). These two chemicals are furthermore herbicides which affects the photosynthetic electronic transport, inhibiting the algal growth in aquatic environment (Eullaffroy and Vernet, 2003), the primary level of the food web. In addition Atrazine even at low exposure concentrations (5µg l-1) affected significantly aquatic organisms (Steinbergi et al., 1995). Agricultural Activities And Chemical Fertilizers When we have looked the harmful effects of fertilizers on environment, it has been thought that mostly nitrogen and phosphors containing fertilizers have given harm on the environment; especially it is well known that it causes the water quality in the watery areas are destroyed as a result of that nitrogen and phosphors containing pollutant are transferred into rivers in anyway and then it also causes eutrophication with increases on the amount of nitrogen and phosphors (Ceran, 2001). The amount of nitrate mixed into drinking water and rivers through washing out process is increased as a result of usage fertilizers containing nitrogen in high level (Sencar et al., 1993). The compounds containing nitrogen has several effects in the view of water pollution, and the most harmful effect is known to be that of changing oxygen compositions, eutrophication, hygiene on the obtaining of drinking water and toxicity problems (Uslu and Türkmen, 1987). Approach of phosphor to surface water causes some undesirable effects in aquatic systems as a result of increase in the primary production. Too much increase in green plants and algae in some rich parts in oxygen of water (eutrophication), increase in the blurrily of water, increase in the light input of aquatic macrophytes, not enough oxygen and occurrence of anaerobic conditions as a result of an increase of amount of dead plants in the bottom of water are important factors affecting the quality (Muslu, 1985). Phosphor components broken up into orthophosphate by aquatic plants are important compositions of food materials. If too much phosphor is loaded, pH value of water and tampon systems are changed (Muslu, 1985). A layer on the water is produced by decreasing surface tension of the water. This layer reduces the transmission of light and oxygen transfer and effect biological activities destructively (Akman et al., 2000). The load of nitrogen and phosphor existing in the environment put pressure on the aquatic ecosystems. Although phosphor has some feeding properties for algae, the extremely high existence in the environment cause some algae to be removed from environment and some of them to be destroyed. This also results with extremely development of taxa tolerating the increase of feeding salts. This change taken place in aquatic ecosystem is not only effective on algae but also destructively affects other living groups (Kalyoncu et al., 2009). Results And Suggestions The use of chemical fertilizers and pesticides unplanned and in extremely high amount in agricultural areas affect destruction on all ecosystems. Some cases must be considered before the usage of chemical fertilizers and pesticides in order to completely prevent or minimize the destructive effects. - It must be note that the pesticides used in agriculture must be easily separable in nature. Beside this, biological fighting methods must be taken over instead of pesticides produced synthetically. - If applications of pesticide are un-exceptionally necessary, farmers must be educated and trained to apply enough and to avoid over use. The technical and sustainable production with plants, which is more economical and suitable for ecosystems, must be carried out for especially in areas near basins and sources of water. -It is well known due to the human health and environment that the chemical fertilizers and pesticides used in agricultural areas are important source of pollutants and reaches to aquatic system with surface water. In order for types of kinds in the aquatic systems to be protected, attention must be applied for application of them in suitable time and dose. The effects of chemical components applied on the aquatic ecosystems must be studied and sustainable control must be carried out. - The ecological agriculture together with advanced agricultural techniques must be applied. Technical and environmentalist agriculture must be carried out for ecological balance to be saved. Some types suitable against diseases and for dried climate must be produced and mechanical and biological techniques for pest management must be developed and then suggested for common use. - Instead of too much water, enough water applications must be desired, wild and surface irrigations must be left. System must be turned to pressurized irrigation, irrigation time for plants must be determined. Irrigation policies must be put into the agricultural irrigation programs of governments. - On the other hand, system must be changed from opened system to closed systems. The usage of water and fertilizer applied by farmers must be planned, controlled and sustainable. - Refinery system for wastewater must be constructed legally in cities. Water and wastewater must be 479 �transmitted through different waterworks and leakages from the system must be minimized. Purified water must be used in green areas and urban agricultural areas. - Especially the problem of drainage must be solved by completing the foundation of irrigation. The regulation for price of irrigation must be made in the most suitable manner. Economical and efficient irrigation must be supplied and direct-indirect encouragement must be applied. - More advantageous against erosion, desert condition, dried climate, more environmentalists, sustainable advanced agricultural techniques must be applied. - As a result, harmful materials reaching to aquatic areas as a result of agricultural activities affect all of livings from algae to fishes living aquatic areas. The importance of agriculture for humanity is unquestionable. But, the aquatic systems are as important as agricultural areas. The chemicals reaching to aquatic areas coming from agricultural areas returns back to people with usage and drinking waters and causes series destructive effects in health. The fresh and clean water sources have gained more importance because of the changes on the global climate. The environmental pollution must be stopped by protecting aquatic ecosystems. The ecology must be kept to be sustainable and carefully followed. References Akman,Y., Ketenoğlu, O., Evren, H., Kurt, L., Düzenli, S., (2000). Çevre Kirliliği (Çevre Biyolojisi). Palme Yayıncılık, Ankara . Akın, G., Akın, M., (2007). Suyun Önemi, Türkiye’de Su Potansiyeli, Su Havzaları Ve Su Kirliliği. Ankara Üniversitesi Dil ve Tarih-Coğrafya Fakültesi Dergisi; 47, 2 ,105-118s. Alloway, B.J., (1995). Heavy Metals in Soils. Blackie Academic & Professional, London. Aguilar, C., Borrull, F., Marce, R. M., (1997). “Determination of Pesticides Đn Environmental Waters by Solid-phase Extraction and Gas Chromatography With Electron-capture and MassSpectrometry Dedection”, Journal of Chromatography, Jan., Vol. 771, pp. 221–231. Anonymous, (2004). Türkiye Çevre Atlası. Çevre ve Orman Bakanlığı, Ankara. Atamanalp, M., Güneş, M., (2002a). Tuzla Çayı’nda (Tercan-Erzincan) yaşayan C. capoeta umbla Heckel, 1843’ nın bazı hematolojik parametreleri (MCV, MCH ve MCHC) üzerine kentsel atıkların etkileri. Ondokuz Mayıs Üniv. Ziraat Fak. Dergisi, 17(3): 5-10. Atamanalp, M., Güneş, M., (2002b). Tuzla Çayı’nda yaşayan C. capoeta’ nın hemoglobin seviyesi, eritrosit ve toplam lökosit sayıları üzerine bir araştırma. Atatürk Üniv. Ziraat Fak. Dergisi, 33(3): 297-300. Atamanalp, M., Cengiz, M., (2002). Bir sentetik piretroit insektisit (cypermethrin)’ in subletal dozlarının Capoeta capoeta capoeta (Güldenstaedt, 1772)’ da hemoglobin, hematokrit ve sediment seviyeleri üzerine etkilerinin belirlenmesi. Ege Üniv. Su Ürünleri Derg. 19 (1-2): 169-175. Atamanalp, M., Keleş, M.S., Haliloğlu, H. Đ., Aras, M. S., (2002). The effects of cypermethrin (a synthetic pyrethroid) on some biochemical parameters (Ca, P, Na and TP) of rainbow trout (Oncorhynchus mykiss). Turk. J. of Vet. Anim. Sci. 26: 1157-1160. Atamanalp, M., Yanık, T., (2003). Alterations in hematological parameters of rainbow trout, (Oncorhynchus mykiss) exposed to mancozeb. Turk. J. Vet. Anim. Sci. 27:1213-1217. Atasoy D., Rastgeldi, C., (2006). Şanlıurfada Pestisit Kullanımı GAP V. Mühendislik Kongresi Bildiriler Kitabı. 26-28 Nisan 2006, Şanlıurfa.1462-1467s. Ceran, Y., (2001). Kimyasal Gübreler ve Sulak Alanlar, Çevre ve Đnsan. T.C. Çevre Bakanlığı Yayın Organı, sayı: 50. 14-19 s. Çelikkale, M. S., (1991). Balık Biyolojisi, Karadeniz Teknik Üniversitesi, Sürmene Deniz Bilimleri ve Teknolojisi Yüksekokulu, Trabzon, s. 250-251. Dağlı, H., (2005). “Đçmesuyu Kalitesi ve Đnsan Sağlığına Etkileri” Bizim Đller. Đller Bankası Aylık Yayın Organı. Sayı 3: 1621s. Dhawan A., Kaur, K., (1996). Toxic effects of synthetic pyrethroids on Cyprinus carpio eggs. Bull. Environ. Contam. Toxicol. 57: 999-1002. 480 �Egemen, Ö., (2006). Çevre ve Su Kirliliği. Ege Üniv., Su ürünleri Fak. Yayınları. No. 42, Đzmir. 120 s. Havıland, William, A., (2002). Kültürel Antropoloji (Çev: Hüsamettin Đnaç, Seda Çiftçi). No: 143. Sosyoloji Serisi: 3. Đstanbul: Kaktüs Yayınları. Heath, A., G., (1987). Water Pollution and Fish Physiology, CRC Press, Boca Raton, Florida, 201-215. Holcombe, G. W., Benoit, D. A., Leonard, E. N., McKim, J. M., (1976). Long-term effects of lead exposure on three generations of brook trout (Salvelinus fontinalis). J. Fish. Res. Bd. Can., 33:1731-1734. Huber, A., Bach, M., Frede, H.G., (2000). Pollution of Surface Waters With Pesticides Đn Source Đnputs. Agriculture, Ecosystems and Environment. 80, 191-204s. Germany: Modeling Non-point Hutchinson, G.E., (1967). A Treatise on Limnology. Vol. Π. John Wiley and Sons. Kalyoncu H., Barlas, M., Ertan, Ö.O., (2009). Aksu Çayı'nın Su Kalitesinin Biotik Đndekslere (Diyatomlara ve Omurgasızlara Göre) ve Fizikokimyasal Parametrelere Göre Đncelenmesi, Organizmaların Su Kalitesi ile Đlişkileri. Türk Bilim Dergisi, 2(1): 46-57. Kumbur, H., Özer, Z., Özsoy, H.D., (2005). Tarım Đlaçlarının (Pestisitlerin) Çevresel Etkileri ve Mersin ili'nde Kullanım Düzeyleri. In: GAP, IV. Tarım Kongresi, 21-23 Eylül 2005, Şanlıurfa, 702-707s. Muslu,Y., (1985). Su Temini ve Çevre Sağlığı. ĐTÜ Matbaası, Cilt III, Đstanbul. Öztürk, Ġ., Tosun, N., (2004). Famoxadone ve Cymoxanil Etkili Maddeli Bir Fungisitin Domates (Lycopersicon esculentum Mill.) Bitkisi Üzerine Fizyolojik Etkisi. Ege Üniv. Ziraat Fak. Derg. 41: 77–87s. Round, F.E., (1984). The Ecology of Algae. Cambridge University Press. Sencar, Ö., Gökmen, S., Yıldırım, A., (1993). Tarımsal Ekoloji. GOP Üni. Ziraat Fak. Ders Notları, Yayın No:l, Tokat. Shakoori, A. R., Iqbal, M. J., Mughal, A. L., Ali, S. S., (1991). Drastic biochemical changes following 48 hours of exposure of Chinese grass carp, Ctenopharyngodon idella, to sublethal doses of mercuric chloride. Proc 1. Symp. Fish & Fisheries, Pakistan.81-98. Shakoori, A. R., Mughal, A. L., Iqbal, M. J., (1996). Effects of sublethal doses of fenvalarate (a synthetic pyrethroid) administered continuously for four weeks on the blood, liver and muscles of a freshwater fish, Ctenopharyngodon idella. Bull. Environ. Contam. Toxicol. 57: 487-494. Steinbergi, C. E. W., Lorenz, R. and Spieser, O. H. (1995). "Effects of Atrazine on Swimming behaviour of Zebrafish, Brachidanio rerio." Water Research 94: 981-985. Taş. B., (2006). Derbent Baraj Gölü (Samsun) Su Kalitesinin Đncelenmesi. Ondokuz Mayıs Üniversitesi, Ordu Fen Edebiyat Fakültesi, Biyoloji Bölümü, 52750, Perşembe-Ordu. 15, 61, 6-15s. Turan Z., (2008). Bazı Pestisitlerin (Dıazınon Ve Dıchlorvos) Scenedesmus Acutus (Meyen) Chodat’ In Gelişimi Üzerindeki Etkilerinin Đncelenmesi. Fırat Üniversitesi Fen Bilimleri Enstitüsü Biyoloji Anabilim Dalı yl., 26s. Uslu, O., Türkman, A., (1987). Su Kirliliği ve Kontrolü (Water Pollution and Control). T.C. Başbakanlık Çevre Genel Müdürlüğü. Eğitim Yayınları Dizisi 1, Đzmir. Yılmaz, F.,( 2004). Mumcular Barajı (Muğla-Bodrum)’nın Fiziko-Kimyasal Özellikleri. Ekoloji, 13, 50: 10-17s. Varghaa, M., Takàtsc, Z. and Màrialigeti, K., (2005). "Degradation of atrazine in a laboratory scale model system with Danube river sediment." Water Research 481 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 553 Title A name given to the resource The Sustainability of Agricultural Activities and Its Effects on Inland Waters and Living Areas Author Author Kalyoncu, Hasan Kalyoncu, İsmail Hakkı Abstract A summary of the resource. Residues of some medicals and fertilizers used in agricultural areas can reach to some receptors through some processes such as irrigation and surface waters. These natural receptors are rivers, lakes and seas. The materials coming from agricultural areas have more destructive effects on the lakes and rivers since these are smaller. The most pronounced pollutants coming from agricultural areas to rivers and lakes are pesticides and fertilizers which are known as a source of nitrogen and phosphor. Chemicals in some areas where pesticide were used are mixed into rivers and lakes through that way and reach to water habitats and organisms. On the other hand, this causes to increase organic ratio, eutrophication and for ecological balance to be destroyed. Pathogens are transmitted to surface waters with human and animal wastes and then these contaminated surface waters threat human health. An important amount of pathogens is distributed to receptors through use of wastewaters for irrigation. In order for this negative effects to be removed, in order to save rivers and lakes, wild irrigation must be stopped, the direct approach of wastewaters into the rivers and lakes must be prevented, the use of fertilizers and pesticides must be controlled, mechanical and biological war must be strengthened. The sustainable ecological living areas can be constructed by taking the water sources and biological kinds under control with these precautions. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed Q Science (General) https://omeka.ibu.edu.ba/files/original/6a16144a3948b7589acef77e87739d7d.pdf 92bf2173dda40bf1ecbbde3973856c20 PDF Text Text Management of Urban Water Sources and Use and Sustainability of Wastewater Đsmail Hakkı Kalyoncu University of Selcuk, Faculty of Agriculture, Department of Horticultural Science, Konya, Turkey kalyon@selcuk.edu.tr Hasan Kalyoncu University of Süleyman Demirel, Faculty of Science & Arts, Department of Biology, Isparta, Turkey hasankalyoncu@gmail.com Abstract: The usage of fresh water supplies on the surface of globe is serviced for human in two forms to be ground and surface water. 75%, 15% and 10% of that water has been used for agriculture, industry and living, respectively. Geographical structure and climate conditions of region have determined the usage of water. While some regions having so much rain and surface water, some regions have not got enough groundwater because of the distinctive properties of those regions. The service of groundwater for usage is more expensive and risky. The unplanned activities in the closed basins can also increase the risks on the usage of groundwater sources. Beside the importance of water services for cities, the case of the wastewater is also so important. The wastewater of the cities located in closed basin also creates some environmental problems as well as some bigger economical problems. The increase in the amount of waste water has been an important problem as population increases nowadays. Sustainable projects on the economical and lack of these sources of groundwater have stamina importance. It can be suggested that the waterworks of city must be reconstructed in two waterworks one of which is to deliver water for drink and another one must deliver water for use. At this stage, the wastewater must be refined and distilled for reuse for some other resound such as especially water agriculture, etc. The distilled water must also be delivered into fields through suitable pipes for agricultural usage. Therefore, the economical, planned and sustainable water usage will be provided. Keywords: Urban water sources, wastewater, sustainability Introduction Nowadays, providing drinking water and that for usage for cities serviced is quite difficult because of the existence of healthy water sources and water sources being nearer to the crowded places. In some years, the problems of suffering for water can become very important struggling problem. Beside the water has a vital importance for livings, it is also important for some sectors of industry. But, the sources have an arbitrary distribution in location and time, and humanistic and natural activities use up, consume and suppress the natural water sources. The sustainable management of the water sources have became an important issue for demands continuously increasing. In spite of the increase of the knowledge of people about how to use the water, economic criteria and political approaches have intent to use water strategies in all manners. Suppressions on the usage of water sources increase pollution with increasing especially urbanization, increase of population and standard of living, competition for water and, therefore, these become prominent and stronger with changes on the climate and natural conditions (Anonymous, 2010a). The water sources are face to face with very important global problems today. The dearth of water becomes more pronounced and world wide problem; inundation happens in many places on the world; the quality of water becomes worse and worse in time in almost all countries in the world and these problems cause many problems such as economic and social. The most important one of these problems is that the sustainability of life on the ecosystems is being threaded. These problems have introduced that some new approaches are needed on the development and that control and management of water sources are needed. At this stage, the issue becomes the subject of meeting, programmes, conferences and some commissions. In spite of the importance of water as a natural source is globally stated, the problems of “lack and pollution of water” is increasing gradually in Turkey 861 �as it is in the world. It must be well realised that as a source the problem of lack and pollution of water is based on the bad policies and management of water sources in Turkey as it is in the world (Anonymous, 2010b). In some countries, there exist some programs to decrease the loss of water on the urban waterworks and this program also try to re-determine the areas where water being used but some more efforts are needed to get access. For the management of water sources, the approaches have focused on river basin rather than centre, and compact projects have mostly been followed by all people (Anonymous, 2010a). A large amount of the water in Turkey has been polluted or is under the risk of pollution because of fast increase in population, urbanization and industrialization etc. For different ideas (irrigation, agricultural usage etc.), many large watery lands have been dried or are under the risk of being dried. On the other hand, many changes have been made in river basins but the ecological effects of them have not been discussed enough in Turkey. As a result, water sources due to sustainability can be subjected to bad results of these. Continuous observation (living sources in water, pollution, environmental quality, general hydraulic, irritation, water sources, ground water, well problems, providing and purification of water) of water sources and protection taken necessary under collected data due to either preservation or provide the effective sustainability are a human duty for future generations (Anonymous, 2010c). There is no successful organisation on the usage and management of water sources. Neither official nor between offices or reiteration and authority complications between offices or problems on the laws and regulations related to protection and usage of water sources make this issue more complicated. Defects of coordination damps the developments on the sustainability of such an important issue (Anonymous, 2010d). The industrial systems to increase the production of ground or surface water must be enhanced because of the fast urbanization necessities of social-economical development beside the increases on the need of irrigation as a result of the increases on the food because of increase on the population. Development of economic potential related to the fresh and groundwater sources in parallel to the principles of the sustainable development by taking care of the environmental effects is also important to prove development on the sustainability of economic development. For the policies on the management of sustainable water can be applied, the legal and official structures on the production and consumption of water are directly related to coordination between corporations, participator authority, truthfully sharing, education, culture, research and development and suitable choice of technologies. On the other hand, the sectoral weights and sectoral powers of the multinational water companies on the determination of water policies are increased by time as a result of global water politics developed on the management of water services. These processes on which the scenarios of changes in the climate, it is needed that international policies on the water management must be discussed by considering due to the our national benefits and public realities. Beside this, some new corporations, institutions and management policies on the management of the water sources and water services may appear in the process of the entering into the European Union must be investigated by considering the our public and national benefits. At present, a process is going on that international politics and the management of our rivers going through boundaries is being concentrated. Weakening of national control on the water sources and planning put some limitation on the development of these sources which must be considered, investigated and some policies must be produced (Anonymous, 2010b). The construction of industrial systems for decontamination and reuse of the wastewater in urban areas must be constructed. Instead of more decontamination system to be constructed, effective usage of enough number of them must be provided and salvation of such problems must be carried out. Decontamination of wastewater and the usage of decontaminated water for city needs must be provided. Water usage, management and economical and sustainable usage of purified water by stopping the leakages of waterworks will be provided. Urban Water Sources and Their Management 10 %, 15 % and 75 % of 40 billion m3 water used up in a year in Turkey has been used in industry, as drinking water and for irritation in agriculture, respectively. Therefore, the agricultural irrigation must be most important and has to have priority from all others. It is possible that 30-40 %of water used at the present by taking the precautions (Anonymous, 2009e; Kalyoncu et al. 2009a; Kalyoncu et al. 2009b). The situation in the case of foundation, management and usage of water source shows the same problems beside this general situation of the water. Clean water must not unnecessarily be wasted and polluted. Drinking water others used some other reasons must be separated from each other. The water obtained by purification of wastewater must be used in green lands, industry and irrigation of agriculture of urban and if it is possible these needs must not be got from clean water. Clean drinking water must only be used for drinking needs, waterworks for cities must be separated from the water pipe nets of that used for other reasons. Therefore, the problems on providing water for cities from clean/fresh ground or surface water sources will be decreased and clean water will be continued to be used. In this case, the effective use in the real part and sustainability of the clean water sources will be kept. Clean water usage will be left for future generations without bad pollution. Besides, that water will provide healthy water for urban kept alive for years (Anonymous, 2010f). The waste and leakage of water must be minimized by checking often and maintaining water working system. The social opinion must also be constructed on this point. It is believed that 30-40 % of water used for urban will 862 �be saved by preventing loss and leakages. The regulations must be re-arranged for groundwater to be used effectively and efficiently. When regulation and organisations are made about groundwater more expensive and high risky, everybody must be more careful. Instead of conserving the water, it must be used in effectively and efficiently by taking benefits of scientific programs, and sustainability must be put on. The regulations in law must be done for management of natural sources due to the individual basin. In order to solve the problem of the water in our country, it must be taken into account that the solution must be looked on the basis of dynamics, researchers and scientific or political offices and programs in country. Because of authorization coincidence, complication and insufficient coordination, the water is not managed by only one office or regulation in Turkey, the water sources are not efficiently used. The problem is made bigger and bigger in time rather than producing solution. Some local organizations and local management must be considered, employed and the solution must be fastened by defeating authorization complexity in water policy and management. Existing water sources must be enhanced and saved in the quality and amount of water. Government must put a strong discussion platform and develop information flow rate from related public offices, Universities and industrial unions. Some project and some programs must be carried out about the efficient usage of water in agriculture, industry and buildings. The problems mentioned above about water policy especially being not one office to organize all have shown some problems especially on applications. This case causes some applications to appear in the quantity and quality of the water. It is not possible to say that the water is managed efficiently in Turkey. The management of water must be in integrity with other organisations. Because of increasing pollution and limited sources, it is necessary that some research and development units must be constructed in this subject. Coordination experience of public offices and societies in Turkey are very poor about the management of water and water sources. Especially, these problems on the areas of management of water and water sources can clearly be seen. For the solution of this problem, a strong coordination between all relevant public offices or civilian societies must be regulated and the water management must be carried out by only one office. Therefore, there must be only one public office and officer powered and in charge of water management in Turkey and coordination must be organized with other offices dealing with water (Anonymous, 2009d; Anonymous, 2009g; Anonymous, 2009h; Anonymous, 2009ı; Kalyoncu et al., 2009a; Kalyoncu et al., 2009b). The Use and Sustainability of Wastewaters The damages given by very fast and unplanned urbanization to the ecological balance is increasing day by day. The industrial areas located around cities and prodigality consumption by people living in cities badly affect environment. Only applications of natural and organic agriculture carried out on the urban agricultural applications provide the ecological systems to be conserved and sustained. Especially, recycling of urban organic wastes by compost method provides a large benefit. Beside this, the effective usage of unused agricultural areas around cities for the reason of urban agriculture will give benefit of usage these areas for some advantages and make around more beautiful from the environmental point of view. Transforming urban agriculture into “Ecological Agriculture” is very important concept because of a series of reasons. The some health and environmental risks caused by closeness of urban agricultural applications to the cities and drinking water sources must be minimized. Changing to the ecological urban agriculture will remove the risk of pollutions on the soil, water and products which are polluted in traditional agriculture because of some hormones, chemicals and some other damaging artificial materials being used (Anonymous, 2010f). The usage of wastewater by purification is most important issue on the management of wastewater. The waste water purified in cities must be used for irrigation and some other needs apart from as drinking water. This will ensure that the fresh-drinking water will not be used and wasted for such ideas. The usage of such purified water for the reasons as mentioned will make the usage of groundwater and the usage of freshwater for such reason will barely or completely be stopped. Because of that, the pureed water will be transferred into the application areas through some suitable pipes of water, the losses and dissipations of water will be minimised. Controllability and sustainability will be provided. The use of the waste water in cities can be kept using some agricultural applications. The solution of this problem and effective usage of these sources can only be possible if authorities pay enough attention to this problem and effort more energy on that in nationwide (Anonymous, 2010f). Results and Suggestions All policies about the management of water must be on the basis that all people have right to reach and use water sources for public benefits. The right of getting clean water free of charge must be guaranteed for everybody. In order to conserve water richness and relieve water problem for the future, the necessary systems, equipments and methods must be developed. In this point, a view of point must be presented and put forward. 863 �Ownership, management and control of water sources must be held by public authorities and must be kept away from effects of global authorities. They have not certainly to be denationalized. The management and control of water must be kept far from political effects, must be regulated in parallel to that what suits national benefits. National water policy must be regulated and applied including some rivers or river basins which flow along the some parts of border of country. Water and environmental issues must seriously be considered in either legislation or execution. A national water policy must be regulated considering the future of water in short and long terms. An environment and water law relating on the usage and conservation of the water sources must be regulated. An authority putting coordination must be considered rather than a single authority relating water policy. Water and water sources are not an area of only one dimension and profession. The solution to problems appeared for some reasons must be made easier by making related authorities obeying related ministry and eliminating the loopholes in the law. The ministry in charge of agriculture and villages controlling the usage of 75 % of water in country must be put also in charge of management of water nationwide. The number of office and organization authorized on the conservation and usage of water sources must be reduced and coordination between them must be organized. Inventory, usage, consumption and scripts of ground and surface waters in Turkey must be carried out regarding public and participant view of point. Pollution of water by wastewater, solid wastes, agricultural additives and usage of hormones must be prevented and some obligatory regulation must be applied. Especially, the situation and usage of the groundwater must be made to have a sustainable solution. Inventory work on the number of groundwater sources, their properties, capacities, etc. must be presented together with local planning. In some cases, rather than forbid groundwater, the usage of them must be regulated according to most effective and scientific usage due to local properties of region. References Anonymous, (2010a). http://www.greenfacts.org/tr/water-resources/water-resources-foldout-tr.pdf Anonymous, (2010b). http://www.imo.org.tr/supolitikalari Anonymous, (2010c). http://www.sempozyum.gen.tr/menu2.aspid=209 Anonymous, (2010d) http://www.belediyebulteni.com/su-kaynaklari yonetimi_haberi_ 14474.html Anonymous, (2009e). http://www.argeportal.com/haberler/38-makale-ve-raporlar/402-su-acil-ar-ge-istiyor.html Anonymous, (2010f). http://www.kenttarimi.org/nedir.htm Anonymous, (2009g). http://www.e-kutuphane.imo.org.tr/pdf/10962.pdf Anonymous, (2009h). http://www.ekolojistler.org/2007-su-raporu-cevre-muhendisleri-odasi.html Anonymous, (2009ı). http://alternatifsuforumu.org/index.php?option=com_content&task=view&id=15&Itemid=34 Kalyoncu, Đ. H., Ersoy, N. & Yılmaz, M., (2009a). In the Scope of Global Climate Change Authorization and Responsibility Areas of Usages of Wather Sources. International Conference on Lakes and Nutrient Loads, 24-25 April, s. 450-455, AUT, Tiran, Albania. Kalyoncu, Đ. H., Kalyoncu, H., & Aydın, M., (2009b). Planning of Ground Water Basins Against Agricultural Pollution and Construction of Sustainable Living Areas. International Conference on Lakes and Nutrient Loads, 24-25 April, s. 299304, AUT, Tiran, Albania. 864 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 639 Title A name given to the resource Management of Urban Water Sources and Use and Sustainability of Wastewater Author Author Kalyoncu, İsmail Hakkı Kalyoncu, Hasan Abstract A summary of the resource. The usage of fresh water supplies on the surface of globe is serviced for human in two forms to be ground and surface water. 75%, 15% and 10% of that water has been used for agriculture, industry and living, respectively. Geographical structure and climate conditions of region have determined the usage of water. While some regions having so much rain and surface water, some regions have not got enough groundwater because of the distinctive properties of those regions. The service of groundwater for usage is more expensive and risky. The unplanned activities in the closed basins can also increase the risks on the usage of groundwater sources. Beside the importance of water services for cities, the case of the wastewater is also so important. The wastewater of the cities located in closed basin also creates some environmental problems as well as some bigger economical problems. The increase in the amount of waste water has been an important problem as population increases nowadays. Sustainable projects on the economical and lack of these sources of groundwater have stamina importance. It can be suggested that the waterworks of city must be reconstructed in two waterworks one of which is to deliver water for drink and another one must deliver water for use. At this stage, the wastewater must be refined and distilled for reuse for some other resound such as especially water agriculture, etc. The distilled water must also be delivered into fields through suitable pipes for agricultural usage. Therefore, the economical, planned and sustainable water usage will be provided. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed Q Science (General) https://omeka.ibu.edu.ba/files/original/5aa802c5dd8053a721ac1f6c2bb2678b.pdf 5858f8f47850faa5a77de9636f7c9f78 PDF Text Text The Determination of Prolactin Gene Polymorphism Using PCR-RFLP Method within Indigenous Anatolian Water Buffalo and Brown Swiss Selçuk Kaplan Department of Animal Science, Faculty of Agriculture, Selcuk University, 42075, Konya / Turkey selkaplan@selcuk.edu.tr Saim Boztepe Department of Animal Science, Faculty of Agriculture, Selcuk University, 42075, Konya / Turkey sboztepe@selcuk.edu.tr Abstract: The objective of this research was to determine the prolactin gene polymorphism within Indigenous Anatolian Water Buffalo breed and Brown Swiss cattle by using PCR-RFLP method. Experimental material for this study consists of 45 Indigenous Anatolian Water Buffalo breed and 30 Brown Swiss cattle. According to the research evidence, Indigenous Anatolian Water Buffalo breed was monomorphic at the exon 3 PRL-RsaI loci. On the other hand, the polymorphism association with exon 3 PRL-RsaI loci detected in Brown Swiss cattle. The allelic frequencies (A, B) in Brown Swiss cattle were 0.82 and 0.18, respectively. The genotype frequencies of AA and AB were 0.63 and 0.37, respectively. The BB genotype was not found in the present study. Keywords: Indigenous Anatolian Water Buffalo, Brown Swiss, prolactin, polymorphism, PCR-RFLP Introduction Nowadays, molecular methods such as RAPD, RFLP, AFLP, STS, STR, SNP have been increasing in animal breeding. To determine the specific genes concerning with economic characteristics of farm animals; first of all candidate genes involved in those should be studied. Some genes are shown as candidates associated with milk yield and characteristics for marker assist selections (MAS) in dairy cattle. As a matter of fact that prolactin affects not only improving mammary glands, but also initiation and maintenance of lactation. Having all these influences and qualities, it comes foreground among the candidate genes. Prolactin as the first pituitary gland hormone was purified and identified nearly 80 years ago. Prolactin was named as pro–lactin because of the stimulatory effects on lactation and mammary gland development. Prolactin is known to have more than 300 biological activities such as water and electrolyte balance, growth and development, immune and reproductive function (Gregerson, 2006). It has been identified that prolactin is secreted in many different places as neurons, prostate, mammary epithelial, endothelial cells and skin cell (Lastra et al., 2002). The number amino acid of prolactin, which is a hormone structure of polypeptide, changes with regard to the species of the living organisms. For example, while prolactin consists of 197 amino acid in rats and mice; it consists of 199 amino acid in human, sheep, cattle and pigs (Freeman et al., 2000). Prolactin is located on chromosome 23 in cattle and comprised of 5 exons and 4 introns (Dybus et al., 2005). There are many studies in relation to prolactin gene polymorphism. A significant portion of these works is composed of RFLP and SSCP mutations (Brym et al., 2005). As an example of these mutations, Mitra et al., (1995) detected the exon 3 A-G point mutation The aim of this study was to determine the exon 3 prolactin gene polymorphisms both Indigenous Anatolian Water Buffalo breed, which is covered the gene resources conservation program for decreasing 168 �numbers in Turkey, and Brown Swiss cattle, which has an important place in the existence of culture breed cattle. Material and Method Material and DNA Isolation Blood samples for DNA isolation for Indigenous Anatolian Water Buffalo breed were collected from Amasya, Afyon, Konya and Sivas provinces in Turkey. Brown Swiss blood samples were provided from Konuklar State Farm in Konya province. Genomic DNAs was extracted from blood samples using salting out technique with slightly modifications (Miller, 1998). PCR Amplification Detection of restriction fragment length polymorphism (RFLP) was carried out according to Mitra et al., (1995). The 156-bp fragment of the exon 3 PRL-RsaI loci was amplified using following primers: forward:5’- CGA GTC CTT ATG AGC TTG ATT CTT -3’, and reverse: 5’- GCC TTC CAG AAG TCG TTT GTT TTC -3’. The PCR was performed in a reaction volume of 15 µl containing approximately 50100 ng of genomic DNA, 1x Buffer (pH: 8.5), 1.5 mM MgCl2 (supplied with the enzyme), 0.27 µM of each primer, 0.25 µM dNTPs and 0.4 units of Taq polymerase (Fermantas) with 9.48 ul sterile distilled water. The PCR application conducted in Thermal Cycler (Techne TC-512). The PCR conditions included initial denaturation step for 2 min at 94°C, followed by 35 cycles with denaturation at 94°C for 45 sec; annealing at 60°C for 45 sec; extention at 72°C for 1 min and final exention for 5 min at 72°C. The amplified DNA fragment of the exon 3 PRL loci was digested at 37°C for overnight with RsaI (5 U/ul, Fermantas). The digestion products were separated on 3% Prona agarose gel (Nu microphor ) in 1x TRIS-borate-EDTA (TBE) buffer. The gel was stained with ethidium bromide and visualized in gel documentation system under UV light by means of transilluminator. Statistical Analysis Statistical analysis was carried out by PopGene Version 1.32 (Yeh et al., 1997). The Chi-square test was used to evaluate whether the population was Hardy-Weinberg equilibrium (Düzgüneş et al., 1983). Results and Discussion As a result of this study prolactin gene exon 3 Rsa I digestion in Indigenous Water buffalo and Brown Swiss cattle is shown in Figure 1. The genotype and allele frequencies at PRL-RsaI loci in Brown Swiss cattle are shown in Table 1. Figure 1. Restriction analysis of PRL 156 – bp PCR products digested with Rsa I on 3% Prona agarose gel (Nu microphor ) electrophoresis stained with ethidium bromide. 1 – 2: PCR products, M: 100 bp ladder marker, C: Control, AB: Rsa I digested PCR product ( 156, 82, 74 bp) and AA: Undigested PCR product. 169 �PRL-RsaI loci N Observed 30 Genotypes AA 19 AB 11 BB 0 Allel frequency A B 0.82 0.18 (χ²)1 Genotype frequency AA 0.63 Expected 30 20.172 8.856 0.972 0.67 1 Test of Hardy-Weinberg equilibrium; Ns: not significant. (P > 0.05) AB 0.37 BB 0.00 0.30 0.03 1.356293 Ns 0.557 Ns Table 1. The genotype and allele frequencies at exon 3 PRL-RsaI loci in Brown Swiss cattle Table 1 shows the allelic frequencies (A, B) in Brown Swiss cattle were 0.82 and 0.18, respectively. The genotype frequencies of AA and AB were 0.63 and 0.37, respectively. The BB genotype was not found in the present study. According to the Chi-square test, the result of Brown Swiss cattle population has emerged in Hardy-Weinberg equilibrium. The recent studies with regard to exon 3 PRL-RsaI loci in buffalo breed and cattle are presented in Table 2. Source Alipanah et al., 2007 Skinkytė et al., 2005 Maksymiec et al., 2008 Udina et al., 2001 Dybus et al., 2005 Kumari et al., 2008 Miceikienė et al., 2006 Khatami et al., 2005 Dybus et al., 2005 Kumari et al., 2008 Skinkytė et al., 2005 Öztabak et al., 2008 Miceikienė et al., 2006 Udina et al., 2001 Öztabak et al., 2008 Mitra et al., 1995 Kumari et al., 2008 Kumari et al., 2008 Sacravarty et al., 2008 Mitra et al., 1995 Khatami et al., 2005 Ghasemi et al., 2009 Alipanah et al., 2007 Udina et al., 2001 Khatami et al., 2005 Mitra et al., 1995 Mitra et al., 1995 Ladani et al., 2003 Buffalo Cattle Holstein Holstein Holstein Holstein Holstein Holstein Holstein Holstein Jersey Jersey Lithuanian Red South Anatolian Red Lithuanian Red Russian Gorbatov Red East Anatolian Red Sahiwal Sahiwal Kankrej Kankrej Holstein Holstein Montbeliarde Red Holstein Russian Aryshire Yoroslav Murrah Nili-Ravi Mehsani 170 N 72 52 720 23 242 223 109 32 185 143 136 40 168 35 40 57 13 26 57 23 32 120 98 46 120 53 19 44 Allele Frequencies (%) A B 0.71 0.79 0.58 0.80 0.85 0.90 0.80 0.98 0.30 0.55 0.87 0.74 0.77 0.91 0.56 0.51 0.88 0.60 0.51 0.80 0.61 0.89 0.79 0.85 0.65 0.93 0.84 0.50 0.29 0.11 0.41 0.20 0.14 0.10 0.20 0.05 0.69 0.45 0.13 0.26 0.23 0.8 0.44 0.49 0.12 0.40 0.49 0.20 0.39 0.11 0.21 0.14 0.35 0.07 0.16 0.50 R AB* α α α α α α α α α α α α α α α α α BB* α α AA* BB* α α α α α �Ladani et al., 2003 Ladani et al., 2003 Average Surti Jaffarabadi 30 23 0.48 0.43 0.73 0.52 0.57 0.27 α α R: The relationship between genotype and milk yield; * Significant relationship between genotype and milk yield; α: Not estimated relationship between genotype and milk yield Table 2. The recent studies with regard to exon 3 PRL-RsaI loci in buffalo breed and cattle As it can be seen from Table 2, there is no literature encountered with reference to exon 3 PRL-RsaI loci polymorphism in Brown Swiss cattle. As for the Holstein cattle, which is known as high milk yield over the world, the highest frequency of allele A (0.98) in the analysed population of Holstein cattle reported by Khatami et al., (2005). On the other hand the smallest frequency of allele A (0.58) reported by Maksymiec et al., (2008). In addition, Alipanah et al., (2007) reported that AB genotype breed in Holstein cattle have higher milk yield than AA and BB genotype. In this study, we found exon 3 PRL-RsaI loci polymorphism in 11 of 30 Brown Swiss cattle. The frequencies of exon 3 PRL-RsaI alleles were found as follows; A (0.82), B (0.18) in Brown Swiss cattle. The average frequencies of A and B allele in literature were 0.73 and 0.27, respectively. The frequencies of allele’s exon 3 PRL-RsaI in this study were identical in comparison with literature. As for the genotype frequencies, AA, AB and BB genotypes were found 0.63, 0.37 and 0.00, respectively. According to the results of studies in Table 2, it is clear that the frequency of B allele is quite low. Because of these results, BB genotype is quite low too. Another result of in this study, Indigenous Anatolian Water Buffalo breed was monomorphic at the exon 3 PRL-RsaI loci. However, Mitra et al., (1995) reported that the allelic frequency of A was found as 0.93 and 0.84, respectively in Murrah and Nili Ravi buffalo breed. In addition, the study made by Ladani et al., (2003) as to exon 3 PRL-RsaI loci in Mehsani, Surti and Jaffarabadi buffalo breed, the frequencies of A allele was found 0.50, 0.48 and 0.43, respectively. As mentioned previously in this study, prolactin gene mutation in exon 3 RsaI digestion site is not observed 45 Indigenous Anatolian Water Buffalo breed. This result is identical to the results have been reported by Mitra et al., (1995). These researchers who carried out the study about exon 3 PRL-RsaI loci in Murrah, Nili Ravi and Egypt buffalo breed stated that they have observed mutations in Murrah and Nili Ravi buffalo breed, whereas they have not observed any mutation in Egypt buffalo breed. As a result of this study, they have concluded that identified prolactin gene mutations in exon 3 PRL-RsaI loci may vary according to the type of buffalo. Yet, these interestingly enough, mutations couldn’t be detected in some buffalo species. Hence, we thought that couldn’t be found any mutation in exon 3 PRL-RsaI loci in Indigenous Anatolian Water Buffalo breed may be a result of this situation. Conclusion At the end of the recent studies, some researchers have emphasized that there is a strict relationship between genotypes and milk yield. Some researchers (Alipanah et al., 2007; Ghasemi et al., 2009 and Sacravarty et al., 2008) claimed that AB genotype in Holstein cattle has higher milk yield than other genotypes. Alipanah et al., (2007) stated that AA genotype cattle has higher milk yield in Montbeliarde cattle. Ghasemi et al., (2009) proposed BB genotype in Kankrej cattle. However, these studies in question have a small place in all of the study. Consequently, in order to have more concrete results and more sound decisions about prolactin gene further investigations should be done due to the fact that prolactin has a significant influence on lactation and mammary gland development. 171 �Acknowledgments This research was supported by a master research project from the Coordinatory of Scientific Research Projects of Selcuk University, Turkey. We thank to Konuklar State Farm for providing blood samples. References Alipanah, M., Kalashnikova, L., & Rodionov, G. (2007). 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Molecular Biology and Biotechnology Centre. University of Alberta, Edmonton, Alberta, Canada. 173 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 362 Title A name given to the resource The Determination of Prolactin Gene Polymorphism Using PCR-RFLP Method within Indigenous Anatolian Water Buffalo and Brown Swiss Author Author Kaplan, Selçuk Boztepe, Saim Abstract A summary of the resource. The objective of this research was to determine the prolactin gene polymorphism within Indigenous Anatolian Water Buffalo breed and Brown Swiss cattle by using PCR-RFLP method. Experimental material for this study consists of 45 Indigenous Anatolian Water Buffalo breed and 30 Brown Swiss cattle. According to the research evidence, Indigenous Anatolian Water Buffalo breed was monomorphic at the exon 3 PRL-RsaI loci. On the other hand, the polymorphism association with exon 3 PRL-RsaI loci detected in Brown Swiss cattle. The allelic frequencies (A, B) in Brown Swiss cattle were 0.82 and 0.18, respectively. The genotype frequencies of AA and AB were 0.63 and 0.37, respectively. The BB genotype was not found in the present study. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed Q Science (General)